Preamble

The House met at half-past Eleven o'clock

PRAYERS

[MADAM SPEAKER in the Chair]

Oral Answers to Questions — EDUCATION AND EMPLOYMENT

The Secretary of State was asked—

New Deal (West Midlands)

Mr. Robin Corbett: How many young unemployed people are taking part in the new deal in Birmingham and the west midlands. [64036]

The Minister for Employment, Welfare to Work and Equal Opportunities (Mr. Andrew Smith): At the end of November, there were just over 10,800 young people taking part in the new deal in the west midlands, 3,000 of them in the Birmingham area.

Mr. Corbett: Those young Brummies who have helped to make the dole queue the shortest for 19 years are delighted with the extra opportunities for training and jobs that the new deal is providing, and they do not understand why the Conservative party would deny them those opportunities. What further steps can the Minister take to assist people with disabilities to make maximum use of what the new deal has to offer?

Mr. Smith: I thank my hon. Friend for his remarks about the new deal and its benefits for the young people of the west midlands and the rest of the country. A total of 52,500 young unemployed people are now in jobs thanks to the new deal, and of those, 5,500 are young people with disabilities. That is a great tribute to the work being done by all the partners in the new deal and our disability employment advisers. That help is in addition to the extra measures being taken through the new deal for disabled people.
The new deal is working for young people who are disabled and for the rest of unemployed young people in this country who, as my hon. Friend rightly pointed out, would have been denied those opportunities by the Conservative party.

Mr. Edward Leigh: What proportion of those entering the scheme leave for other benefits or disappear from the scheme altogether?

Madam Speaker: Order. I remind questioners and the Minister that this is a limited question and it relates to the west midlands.

Mr. Smith: In the west midlands, as elsewhere, the number of those whose destination is unknown having

benefited from the new deal is significantly lower than it was under the jobseeker's allowance regime introduced by the Conservative party. When we look at the cohorts of young people passing through the new deal, the number whose destination is unknown is as low as 12 per cent.

Mr. Bob Blizzard: I wonder whether Birmingham and the west midlands are experiencing the problem that exists in my constituency, which is that, although the new deal is working successfully, some young people face multiple obstacles to employment. They are people who were previously referred to as being unemployable. They may have had drugs problems, they may be alienated or have been involved in petty crime. We are finding that, for such people, the gateway period is not long enough to prepare them for work. Even if they take up an option—

Madam Speaker: Order. I must be firm about questions. This is Question Time and the hon. Gentleman must not set the scene in his own constituency. If he wants to do that, he can put a question on the Order Paper. Will he come to his question for the Minister in relation to the west midlands?

Mr. Blizzard: Thank you, Madam Speaker. Will the Minister consider extending the gateway period or offering more support for young people in Birmingham and the west midlands who are finding it difficult to succeed properly in the new deal?

Mr. Smith: It is important to stress that the most disadvantaged young people, including those who have had drug problems, ex-offenders and those with severe literacy and numeracy difficulties, are getting jobs through the new deal. They are being given the help that they need in the gateway period. Of course, although the new deal is working well, it can always be improved. We have a continuous improvement strategy under way and that includes a more intensive use of the gateway services such as that urged by my hon. Friend.

Teachers' Pay

Mr. Phil Willis: What estimate he has made of the effects on (a) local education authorities and (b) teaching staff of the staging of the last three pay awards for teachers; and if he will make a statement. [64037]

Mr. David Rendel: If he will make a statement on his Department's plans for expenditure on teachers for the current year and for each of the next three years. [64038]

The Secretary of State for Education and Employment (Mr. David Blunkett): The impact of staging the teachers' awards over the past three years has enabled education authorities to meet the pay bill without even further reductions in the provision of services or investment in standards. The impact on teachers has generally been to irritate them. The Government recognise that and have done so in their evidence to the schoolteachers' pay review body for the coming year.
The investment programme for the next three years in the comprehensive spending review settlement has ensured that, over the next three years, there will be a


16 per cent. increase in real terms for education. There will be £19 billion of new investment for the next three years which, this year, means a cash increase of 5.7 per cent. to local authorities. In the years 2000 and 2001, as well as the external funding increases to local authorities, we have also allocated up to £1 billion to fund the proposals that are now out to consultation for the Green Paper on the reform of the teaching profession, to ensure recruitment, retention and motivation in the teaching profession in the years to come.

Mr. Willis: I thank the Secretary of State for that comprehensive answer and, in particular, for his admission that it was his intention to annoy the teachers. He has succeeded. The Liberal Democrats welcome the evidence that the Government gave the pay review body, which intended that this year's pay settlement would not be staged. Will the Secretary of State confirm that that is the Government's intention? Does he not feel that it is hypocritical of the Government to then cite the £140.7 million overhang from last year's pay award as an excuse to drive down teachers' pay this year?
Will the teachers have to pay for the Government's mistakes, or will that fall on the other services provided by local authorities?

Mr. Blunkett: The Government have not made a mistake. We have ensured that there are new resources to meet the challenge of the next three years. The school teachers' review body will of course have to take account—it is its job to do so—of the extra expenditure and other factors, such as the target inflation level. It is also the body's job to ensure that it takes account of recruitment and motivation in the teaching profession. We expect it to do that also. In our evidence, we recognised that our intention is not to phase the award. However, we shall have to wait until the award is announced, and consequently make a decision based on the volume of cash and percentage increase recommended by the body.

Mr. Rendel: Does the Secretary of State accept that staging over the past three years has effectively resulted in a 2.5 per cent. cut in teachers' salaries? Will not the first 2.5 per cent. of any increase recommended this year therefore do no more than catch up with a cut that has already been made?

Mr. Blunkett: No, I do not accept that. In the recommendations—I am responsible only for the most recent one—the STRB had to take into account the inflation rate, overall pay settlements in comparative sectors and affordability for local authorities. It would be quite useful if hon. Members considered events in the private sector and settlements across the country when making comparisons with public service pay.

Mr. Derek Twigg: Is it not true that the teachers' pay structure does not reward experienced teachers for excellence in the classroom? Will not the Green Paper proposals deal with that problem?

Mr. Blunkett: My hon. Friend is entirely right. Current proposals, and the questions that have been asked today, deal with the annual round. However, we are talking about a restructuring, so that we are genuinely able to attract people into the profession, and so that they know that they

will not only be reasonably rewarded when entering the profession but well rewarded as they move through the profession and gain experience—and as their abilities shine through in enhanced performance and lifted standards. The intention of substantial investment, with something for something, is to transform prospects for teachers and children in the years to come.

Helen Jones: Does the Secretary of State agree that one of the factors demotivating teachers in the past 18 years has been the lack of recognition of their professional expertise? Does he agree that the proposals in the Green Paper will not only give higher rewards to good classroom teachers but enable teachers to extend their leadership roles in school and to develop their own careers? Is that not one of the best ways of motivating teachers and ensuring that they remain in the profession?

Mr. Blunkett: I entirely agree with that. Our proposals—which include substantial investment in establishing a leadership college, investment in head teacher training and the Green Paper's professional development proposals that can be taken advantage of by all teachers—will provide not only that motivation but the excellent skills that are needed. Those proposals in themselves will lift the teaching profession's self-esteem and confidence and help to encourage people of all ages to want to enter one of the most rewarding jobs that anyone can take up.

Mr. Dafydd Wigley: Does the Secretary of State accept that the teachers' pay issue is one central factor, although it is not the only one, creating the severe teacher shortage—which amounts to almost 40 per cent. in subjects such as technology and mathematics, and 30 per cent. in modern languages? Will he assure the House that the deal on which he settles will be aimed at overcoming those shortages?

Mr. Blunkett: I hope that the proposals—not merely in the review body's report but in the Green Paper—will make a substantial difference in recruitment in the years to come. However, we have to get the matter into some sort of perspective. I do not want there to be talk of crisis in the education service when, across the United Kingdom, there are only 2,600 teaching vacancies—which is 0.8 per cent.—240 of which are for head teachers. It is important to remember that, although I accept that the position has worsened in recent years. That is why my hon. Friend the Minister for School Standards has announced a package of measures with the Teacher Training Agency, including £5,000 bonuses for maths and science graduates to come into the profession. We are also proposing radical changes for the teaching profession in our Green Paper—an issue that the Conservatives neglected for the two decades they were in office.

Mrs. Theresa May: The Secretary of State for Health has managed to recognise the crisis in the health service caused by the lack of recruitment of nurses. It is a pity that the Secretary of State for Education and Employment is unwilling to recognise the growing crisis in our classrooms caused by a lack of teachers and problems of recruitment.
Whatever Government figures the Secretary of State gives, a recent survey by the National Union of Teachers shows that the real figure for teacher vacancies is—[HON. MEMBERS: "Oh!"] I am fascinated to note that Labour Members greet mention of the NUT with such derision. Its survey shows that there are 10,000 vacancies—four times the number that the Government accept. Despite there being so many vacant posts, over Christmas the Secretary of State cut targets for teacher recruitment by 13 per cent. Does he believe that he can solve the problem of the lack of teachers in our classrooms by recruiting fewer of them, or is he just desperate to fiddle the figures to avoid failing to achieve yet another target?

Mr. Blunkett: The shadow Minister is matching the shadow Secretary of State in her enthusiasm to back the National Union of Teachers and, to mirror his words, to set up workers co-operatives running our schools. "Leave it to the teachers" is the new Conservative party slogan.
We are interested in a partnership with teachers. We want to support them and work with them to help them do their job. Nobody pretends for a moment that it would help recruitment, morale or standards for me to go round suggesting that there is a crisis when there is not. I was shadow Health Secretary for two years and I well understand what those in the acute services can present on television. We are ensuring that there is a plan for the future. We shall overcome recruitment problems, we shall raise standards and, above all, we shall make the teaching profession one that all people want to join.

Citizenship

Mr. Ben Bradshaw: What plans he has to ensure that citizenship is taught in schools. [64039]

The Parliamentary Under-Secretary of State for Education and Employment (Mr. Charles Clarke): We will ensure that citizenship has a key place in schools in the new century, drawing on the advice from the advisory group on education for citizenship and the teaching of democracy in schools, chaired by Professor Bernard Crick, which is helping to inform the current review of the national curriculum.

Mr. Bradshaw: I am grateful for that reply. How does my hon. Friend respond to my constituent, Christopher Hopkins, aged 9, who wrote to me recently? He said:
I would like to know if you were planning to put politics in the national curriculum, as I find it very interesting.
Does my hon. Friend agree that if those in the younger generation are to have confidence in our political system and play an active role in it, they have to understand how it works? Will he immediately scotch rumours that Mr. Woodhead is trying to veto the sensible proposals to put citizenship into schools?

Mr. Clarke: Certainly, no one is trying to scotch or veto any proposals. We are taking advice from the Qualifications and Curriculum Authority and a wide range of organisations on the best way to put into effect the reforms that we are discussing. I agree very much with my hon. Friend's comments about the importance of teaching politics and the approach to political life and democracy in our schools. That is one reason why many politicians from all parties have supported the idea of teaching citizenship in some way.
Just to add another point, a primary school in my constituency is teaching philosophy. There has been a tremendous response because the interplay of ideas and arguments is such an important part of ensuring that children grow up to play a full part in society and in the community.

Mr. Andrew Rowe: Does the Minister accept that perhaps the most important element of the teaching of citizenship is giving young people the thought that they can influence what happens in the world in which they are growing up? Will he encourage the growing number of schools that are taking seriously ideas from their pupils about the running of their schools and the work they can do in the community?

Mr. Clarke: I agree very much with the hon. Gentleman. Let me take the opportunity to commend his work in developing youth parliaments and other approaches to the teaching of citizenship. Schools councils have a great deal to offer. Although we have no intention of making them a requirement in the curriculum, they have assisted children from a young age to address precisely the issues that my hon. Friend the Member for Exeter (Mr. Bradshaw) and the hon. Gentleman have raised.

Mrs. Anne Campbell: With the welcome use of referendums by the Government, will the Minister take heed of the importance of sixth formers and those reaching the end of their school careers being adequately informed about the issues on which they may have to vote? I refer in particular to entry into the single European currency and the Jenkins commission report on electoral reform.

Mr. Clarke: I am grateful to my hon. Friend for that question. Referendums on issues such as she has raised are an important constitutional development that requires citizens to be as fully informed as possible of the implications of decisions that they are being asked to take, which include important decisions about economic and monetary union, proportional representation and electoral reform, and the issues on which there have already been votes in Scotland, Wales and London. That is one reason why developing within the curriculum the idea of strong citizenship will help to produce a more informed democracy and better quality decisions.

Mr. David Willetts: Is not citizenship just one of a range of new curriculum topics that Ministers want to impose on schools? When will they stop? There are a host of them, including "values" and "environmental awareness". When will the Government stop their remorseless flow of instructions and directives to teachers and schools—what the Secretary of State has just called partnership? Does not the Minister understand that the 322 communications sent from his Department to schools and LEAs last year represent an impossible burden which is distracting teachers from delivering the national curriculum and raising standards in schools?

Mr. Clarke: I am interested in the hon. Gentleman's comments on citizenship. The reform and review of the national curriculum is exceptionally important to ensure that it best reflects current needs. As the hon. Gentleman


said, the curriculum includes citizenship, sustainable development and personal, social and health education, because it is important that those issues be addressed. However, we are not imposing anything; we are undertaking a review and taking advice from a wide range of people.
I can only return to what I said earlier: some senior Conservative politicians acknowledge the need to examine the issues properly and would be rather shocked by the cavalier way in which the Opposition today simply dismiss their considerations.

Helen Jackson: Is it not irresponsible of the shadow Minister to suggest that Parliament should have no interest in what happens in schools apart from teachers' pay and similar issues? Does my hon. Friend recognise the role that his Department can play together with right hon. and hon. Members so that when we examine new ways of conducting our business to ensure democracy in the Chamber, in Committee and in local government, the issues are better understood in schools and colleges of further and higher education?
Will my hon. Friend help those of us on the Modernisation Committee to look at new ways of strengthening the interface between the younger generation and the democracy of which we are proud to be members in this House?

Mr. Clarke: I strongly support what my hon. Friend has said. I was fortunate enough to see the parliamentary website—which has been developed by the education unit of this House—at the British educational technology exhibition at Olympia yesterday, and that does precisely what my hon. Friend mentioned. I played around with the site, and saw how it was presented and working. All those in this House who are developing such education, so that young people can understand the nature of our democracy, deserve credit and thanks, and I pay tribute to those working on such projects.

New Deal (Young People)

Mr. Simon Hughes: How many Londoners benefited from the new deal for young people during 1998. [64040]

The Minister for Employment, Welfare to Work and Equal Opportunities (Mr. Andrew Smith): Latest figures to the end of November show that over 28,000 18 to 24-year-olds have benefited from the new deal in London.

Mr. Hughes: Those figures do not reveal that the outcome in London has been relatively poor. Given that Glasgow, the worst area in Scotland in terms of the new deal, is better than half of London; given that Liverpool has had a better outcome than two thirds of London; and given that the worst area in Wales in terms of jobs from the new deal has had a better outcome than all but three of the 20 areas in London, what will the Minister do to make sure that London as a whole has a much better success rate and, in particular, that my borough of Southwark—which is bottom of the league table—has a better success rate than less than 10 per cent. of those who

go into the new deal coming out with jobs? In Southwark, the general view is that it has been a lot of money for very little product.

Mr. Smith: There would have been no product at all if the hon. Gentleman had had his way, because there would have been no new deal. He should not talk down the achievements of the new deal in London, which has placed 5,000 young people in jobs, 2,500 in full-time education and training and another 800 in the environmental task force and voluntary sector programmes. The hon. Gentleman should remember that London has 14 of the 22 most deprived local authority districts in the country, and that is why young people there particularly need the help that the new deal provides.
We have set up a business coalition for London, which is mobilising London businesses to help youngsters in the most deprived parts of the city. A continuous improvement strategy—focusing on job placement, job retention, qualifications gained and the satisfaction of young people and businesses with the new deal programme—will focus especially on what else can be done to improve the performance in London. The hon. Gentleman should not sell that down the river.

Kali Mountford: I am glad to hear the figures that my right hon. Friend has just given—particularly the fact that 5,000 young Londoners have found jobs as a result of the new deal. That is a price worth paying, and it reflects the fact that 52,000 other youngsters have found work through the new deal. Given that important fact—and knowing that social deprivation often comes from unemployment—does the Minister understand why the Conservative party is opposed to the new deal and that great success? If he does understand it, can he explain it to me, because I certainly do not?

Mr. Smith: It is incomprehensible. The Conservative party opposed the new deal at the general election—the Liberal Democrats opposed the means of funding it—and all they can do is repeat their catastrophic failure in terms of youth unemployment, and unemployment in general in this country, which left a whole generation neglected and its needs ignored. The new deal is bringing the help that we promised at the general election, and to have 52,500 young people in work only seven months into a new programme is a major achievement of which we are proud.

Mr. John Bercow: Will the Minister confirm that the average cost per job of the new deal programme in London is £11,000, by comparison with £443 for a job obtained from a job club and £282 per job through the restart programme? Given that, only this week, we have witnessed among young Londoners between 18 and 24 a substantial increase in the number of those who have been unemployed for between six and 12 months, why does not the right hon. Gentleman cease to be so wet behind the ears and admit that the programme has been a colossal and expensive failure?

Mr. Smith: The figures quoted by the hon. Gentleman are a grotesque fabrication by his hon. Friends on the Opposition Front Bench. The true average cost of securing jobs through the new deal is about £1,000, and very good value that represents. It is money well spent, bringing


hope and opportunity to young people who would be denied them by the hon. Gentleman and his hon. Friends. As for the labour force survey statistics, they show that over 14,000 more young people in that age group have gained employment since the new deal started.

Youth Service

Mr. Phil Hope: If he will outline his plans for the youth service. [64041]

The Parliamentary Under-Secretary of State for Education and Employment (Mr. George Mudie): The Government see the youth service not only as carrying out its traditional tasks, but as constituting a vital partner in our vision of ending social exclusion and widening participation. A paper on the future of the youth service is in preparation, and will be available for consultation soon.

Mr. Hope: I thank my hon. Friend for his reply. The paper is eagerly awaited throughout the country.
Is my hon. Friend aware that youth workers in Corby play an important and effective role in working in the community with the young people who experience the greatest problems—young people with problems related to drug abuse, young people who are perpetrators and victims of crime and young people who have left school with no qualifications? The youth service plays a critical role in helping those young people to return to the community. Will my hon. Friend devote all his energies and ability to giving the service new purpose and new leadership, so that it continues to be open to all young people and can target its resources and expertise on those who are most disadvantaged and most alienated from their communities?

Mr. Mudie: I thank my hon. Friend for what he has said, and congratulate the youth workers in Corby. As the House knows, last year we conducted and published the first national audit of youth service work. The details varied: some authorities spent just under £300 per youngster in their areas, but the amount fell as low as under £20.
I urge local authorities and those responsible for the youth service to see ending social exclusion, widening participation and returning youngsters to either education or work as a vital part of their job. They need not necessarily wait for the consultation paper, or for anything else to happen; they should get on with the job of refocusing and helping youngsters.

Mr. Donald Gorrie: One obstacle in the way of the youth service in my part of the country is the Government's delay in producing national guidelines or an approved scheme to deal with the registration of youth workers and youth organisations, as proposed by Lord Cullen after his inquiry into the disastrous events in Dunblane. Can the Minister give us any idea of when the Government might introduce either United Kingdom or separate English and Scottish arrangements enabling local authorities to work together to produce an approved scheme that will allow more youth workers to be properly vetted?

Mr. Mudie: Vetting is a problem. I hear many requests from the youth service for statutory provision, but I am at pains to tell youth service workers and authorities—including local authorities—not to wait for legislation. They know the task that the Government have placed at the top of the agenda: ending social exclusion, an aim that is shared throughout the House. I urge local authorities, notwithstanding their wish for statutory backing, to get on with the job even before the publication of the consultation paper.
Given a record revenue support grant settlement and a very good standard spending assessment for education, there is little excuse for any local authority not to take the youth service seriously. I find it strange that local authorities and others who say that they approve of participation are not strengthening and refocusing their youth services.

Disabled People

Mr. Tom Levitt: What measures he is taking to promote the retention of people in employment when they become disabled. [64042]

The Parliamentary Under-Secretary of State for Education and Employment (Ms Margaret Hodge): My hon. Friend has drawn attention to an important aspect of our drive to help people with disabilities into the labour market. Clearly, it makes good sense to offer early help to people who, through disability, risk losing their job. The Employment Service already helps some 5,000 disabled people a year to retain their jobs and the new deal for disabled people will explore what further employment and training support is needed.
As part of the £30 million package of extra help that we announced in October, we are increasing the amount of help that is provided through access to work by £12 million over the next three years. I am also working with colleagues in other Departments and with the voluntary sector to ensure that all our policies work in tandem to help disabled people to remain in work.

Mr. Levitt: My hon. Friend is clearly aware that to assist a disabled person to stay in work enhances not only their dignity and income, but their productivity, and prevents them from what could be a lifetime on the dole. It must be frustrating for an employee in middle age to lose their job because of reduced dexterity and mobility or increased sensory impairment. I welcome the measures that my hon. Friend has described.
Will my hon. Friend assure the House that not only now through the agencies of the Employment Service, but in future through the Disability Rights Commission, the retention of disabled people in their current employment will be promoted wherever possible?

Ms Hodge: I am delighted to be able to reassure my hon. Friend on that point. I would particularly like to thank him for all his work in supporting civil rights for disabled people. Clearly, it makes good sense to try to keep people in their jobs, rather than to force them on to benefits and then to try to bring them back into the labour market, so that will be the thrust of all our policies.

Mr. Michael Jack: While I welcome what the Minister says, is she aware of the considerable difficulties experienced by the children who come out of a school such as the Pear Tree school in my constituency—which deals with children who have severe learning difficulties—in gaining a place in the employment sector in the first place? Will she undertake to study the matter and to look at the problems that are being encountered by the school in connection with further education, social services and the Employment Service? As a first step, will she to speak to the school's head mistress, Mrs. Jean Cooke, about her first-hand experience in that difficult area?

Ms Hodge: I give the reassurance that, if the right hon. Gentleman writes to me, I will look into the particular circumstances of the children who leave that school. I know that he has raised the matter previously with my hon. Friend the Minister for School Standards in relation to the Green Paper on special educational needs. Clearly, it is important that young children with learning disabilities should be given opportunities in the labour market. Part of the new deal and our policies to open access to further education are geared towards ensuring that those opportunities exist.

Mr. Peter L. Pike: Will my hon. Friend give an assurance that Remploy factories, which have a tremendous history of employing disabled peopled, have an important part to play, in addition to all the other measures that the Government are announcing?

Ms Hodge: I can give my hon. Friend the assurance that Remploy will have a crucial role over the coming period in ensuring that we provide employment opportunities for people with disabilities. We want not only to provide opportunities in its factories, but to ensure that we can progress people through the factory into open employment, so that we can start to deal with the discrimination that people have experienced in the labour market over many years.

Rev. Martin Smyth: I welcome the steps that have been taken, but sometimes it is difficult to get what might be available through to people who require that help. Is the onus on the individual, or are the social security officers being trained to give guidance to those with disabilities as to the benefits and aids that might be available?

Ms Hodge: I am working with my colleagues in the Department of Social Security to ensure that we get a joined up Government approach to ensuring employment opportunities for disabled people. I am also working with colleagues in the Department of Health, so that we can get that liaison going. We have special advisers in the Employment Service focusing on the employment needs of disabled people.
As well as educating those who work with disabled people in the public services, we hope to mount an information and education campaign among employers so that they can take advantage of the abilities that disabled people can offer in the workplace. The campaign will also encourage employers to open up job opportunities in their businesses to more disabled people.

New Deal

Mr. Dennis Skinner: What new measures he plans to introduce to expand opportunities under the new deal; and if he will make a statement. [64043]

The Secretary of State for Education and Employment (Mr. David Blunkett): So far, 201,000 young people have entered the new deal programme and 52,500 have gone into work. In addition, we have introduced a new range of initiatives that includes the skills shortage pilot programme. Employers are able to access three quarters of the total amount available in subsidy if they are prepared to provide up-front, concentrated skills training. Also, 100,000 young people will benefit from the new mentoring programme, and the 28 new deal pilot programmes will help 90,000 people aged over 25.
All those measures mean that we can contribute to the phenomenal change that has taken place in the labour market. They also put into a reasonable context the opinions of the pundits about this week's figures for the number of people going into work and for the unemployment rate.

Mr. Skinner: Can I suggest another idea to my right hon. Friend? He, like many Labour Members, will be aware that the local authority is often the largest employer in areas of high unemployment, so why not make more use of those authorities to implement the new deal? Unemployment is excessively high in some of the old colliery areas. Under the new deal scheme, new training centres could be established and run in co-operation with those local authorities. That would ensure that, in future, there would be people to mend the roads, repair the schools and so on. That would be a useful approach, and I hope that my right hon. Friend will take it on board.

Mr. Blunkett: My hon. Friend is right. In replacing the old skill centres, we must look imaginatively at how the national traineeships that we are developing this year and the modern apprenticeship programme can directly impact on the skills that young people need to get into work. I am happy to assure my hon. Friend that my Department will study the way in which the national traineeships and the Employment Service new deal can be linked to build on the success that we have achieved in the task that we face.
Since the Government came to office, we have halved the number of young people under 25 out of work, compared with the total that we inherited from the Conservatives. That total was 178,000, and is now down to 88,000. I am sure that Conservative Members, even without our new numeracy programme, can do the sums necessary to see that the total has been cut by 50 per cent. We will be able to do even more if young people acquire the skills and training that my hon. Friend advocates.

Mr. Paul Keetch: Does not the Secretary of State agree that, given the enormous resources that have gone into the new deal programme, it is important that the House can be sure that the scheme is working as well as the Government want it to? Does he recall that page 12 of the Government's specification for the new deal programme for young people aged between 18 and


24, tells potential contractors that at least 45 per cent. of people on options would move into subsidised employment? So far, that figure has totalled only 25 per cent. Does not that show that the new deal programme is not working as well as the Government hoped?

Mr. Blunkett: I am sure that that forecast was contained in paragraph 3 of page 12. However, I think that the hon. Gentleman has missed the crucial point, which is that the key to ensuring that the value-for-money precepts built into the new deal programme are achieved is that the programme has a target for unsubsidised employment. The gateway proposals on providing advice, counselling and social skills have enabled that target to be achieved and, in fact, exceeded. The latest figures show that we reduced the claimant count for that particular group by 5,000 in December alone.

Mr. Andrew Reed: While I warmly welcome the fantastic news about the number of young people who are now in employment, does my right hon. Friend agree that it is crucial to bring on line as quickly as possible assistance for those over 25 and, in particular, for people in their 40s who find themselves unemployed? We must accept that manufacturing jobs are being lost. For example, at Ladybird Books in my constituency 200 people will lose their jobs and, as they have been working on machines that are more than 30 years old, it will be extremely difficult for them to find work. Can we ensure that assistance is given to them as quickly as possible, so that they do not have to wait to become long-term unemployed before they get help from the new deal?

Mr. Blunkett: I agree entirely that we need to be able to do that and I look forward to being able to expand on the pilot programmes that I mentioned, which will help 90,000 such individuals. It is a case not simply of the new deal, but of the whole programme from the Employment Service and the Department for Education and Employment, including the rapid response unit, which is moving in quickly where redundancies are declared, and working with the training and enterprise councils, employers and trade unions to ensure that we can immediately move those people into other opportunities for retraining or directly into jobs. Bearing in mind the fact that we face a challenge this winter, the success of that programme was exemplified in yesterday's figures.

Mr. Damian Green: The Secretary of State's claims for the new deal bear close scrutiny. In November, the Government said that they would spend £660 million in the coming financial year on the new deal. In December, the Minister for Employment, Welfare to Work and Equal Opportunities claimed for the first time, as he repeated this morning, that each new deal job cost £1,000. With the benefit of the numeracy programme, the Secretary of State should be able to work out that that means that there will be 660,000 long-term unemployed young people later this year. Either the Chancellor's economic policy is even more disastrous than I thought, or that £1,000 figure is complete nonsense. Which is it?

Mr. Blunkett: I was genuinely expecting more of an Oxford graduate.

Mr. Green: Answer the question.

Mr. Blunkett: I am about to do so. The calculations are sensible and take into account the fact that when

someone gets a job he or she pays back into the Exchequer in tax and national insurance and thus contributes directly rather than drawing benefits. [Interruption.] It is no good hon. Members saying, "Ah!". Every time someone draws a benefit, he or she costs the state money. Every time someone pays tax and national insurance, it helps us to invest in stopping people being dependent on the state. New Labour stands for independence, dignity and self-reliance.

Ms Sally Keeble: Will my right hon. Friend join me to pay tribute to the staff of the Employment Service in Northampton, who have been taking new deal road shows round shopping centres, especially in places with a large number of single parents? They have done so jointly with staff from the Benefits Agency and have provided good advice and opportunities to single parents under the new deal programme. Will he ensure that such schemes are extended to other areas because they are an exercise in joined-up government, they provide real opportunities to lone parents and they also ensure that staff in Government agencies are encouraged to show initiative and imagination in the way in which they develop such programmes?

Mr. Blunkett: I certainly agree with my hon. Friend and I congratulate those staff in Northampton who have developed that programme and worked together to make it successful. The child care initiative and the forthcoming working families tax credit, together with the announcement that the Secretary of State for Social Security and I made yesterday, which builds on the enormous amount of work that my right hon. Friend the Minister for Employment, Welfare to Work and Equal Opportunities has done to draw up the gateway proposals, with advice, support, counselling and rehabilitation, will all contribute to making success a reality throughout the country.

Left-handed Children

Mr. Peter Luff: What assessment he has made of the educational and training value of the video, "Left-Handed Children; A Guide for Teachers and Parents", produced in consultation with his Department and the Teacher Training Agency; and if he will make a statement. [64044]

The Minister for School Standards (Ms Estelle Morris): The video can play a part in raising teachers' awareness of the particular issues surrounding left-handed children. I hope that it will be of use both for the initial training and the continuing professional development of teachers.

Mr. Luff: I thank the Minister for another constructive answer on this important but previously overlooked problem. I am glad that she agrees that the video produced by Mark Stewart and the Left-Handers Club of Great Britain and generously sponsored by the Post Office can play a part in improving teachers' awareness of this important issue. I am sure that she welcomes the fact that the Teacher Training Agency is sending the video to all providers of initial teacher training. What can be done to


ensure that teachers in nursery, first and primary schools are made aware of its existence and get a copy, and ensure that teachers and governors sit down and watch it?

Ms Morris: The hon. Gentleman is right that much progress has been made in acknowledging that the left-handedness of children is a factor in the educational development of some of them. I am pleased that he welcomes the fact that the Teacher Training Agency has agreed to fund distribution of the video to initial teacher training providers. Beyond that, it is for others to make it clear that the video is available. Ultimately, the allocation of resources for purchasing videos and other things is up to head teachers and governing bodies.

Mr. Michael J. Foster: Will the Minister join me in congratulating Mr. Richard Buttle, the head teacher of Redhill primary school, his staff and the children, who took part in making the video? Does she agree that this exemplifies the high standards of teaching in that school and in Worcestershire as a whole?

Ms Morris: I am happy to do so and to confirm that the Teacher Training Agency has informed me that the video is of good quality. I extend my congratulations and thanks to all involved.

ILO Conventions

Mr. Andrew Mackinlay: If he will review the UK's contribution to the implementing of International Labour Organisation conventions; and if he will make a statement. [64046]

The Minister for Employment, Welfare to Work and Equal Opportunities (Mr. Andrew Smith): We have been reviewing the conventions as yet unratified by the United Kingdom. I hope to be able to make an announcement shortly.

Mr. Mackinlay: I thank the Minister. May I remind him that there is a long list of unratified or unimplemented ILO conventions? I welcome what I think that he said about publishing the comments of the Government in respect of them all. Will he address with urgency the ratification of conventions 111 and 138, which relate to discrimination in employment and combating the exploitation of child labour? They are important and their non-ratification is causing us some embarrassment, especially in respect of the latter. Will he consider convention 137 on dock workers? Can we have early re-ratification of convention 26 on the minimum wage?

Mr. Smith: I share my hon. Friend's concern about the importance of those conventions and the desirability of the United Kingdom being able to ratify them. We took a leading role in securing the adoption of the declaration on fundamental principles and rights at work at the ILO convention in Geneva last June. The steps that we have set out in "Fairness at Work", along with introducing the minimum wage and signing up to the social chapter are significant strides forward for workers' rights and representation in this country. I hope to reach agreement shortly on signing up to convention 111 and also to convention 138 on the minimum age in respect of child

labour. We have been working closely with other bodies in this country and internationally to stamp out the grotesque abuses of child labour.

Lower Class Sizes

Mr. Ian Bruce: What representations he has received from school governing bodies with infant and junior classes about the effect of lower class sizes for five, six and seven-year-olds on future classes for eight, nine and 10-year-olds. [64047]

The Minister for School Standards (Ms Estelle Morris): Some governing bodies have sought clarification of the implications of the policy for junior classes. We have made it clear in our guidance to local education authorities that lower class sizes for infant pupils must not be achieved at the expense of junior pupils. We are providing £620 million for the pledge to be met fully and to ensure that resources are not diverted from other phases of education.

Mr. Bruce: St. John's school, Weymouth, wrote to me about a point on which I wrote to the Minister and on which she has replied to me. The school now has classes of 30 where previously it had had higher numbers. That means that the school's funding for the later years relies upon having larger classes to ensure that it gets the same funding. The school is concerned that bringing in lower class sizes will undermine its viability. It simply asks the Government to address the issue. This is important to a county such as Dorset, which is at the bottom of the standard spending assessment league table—the money that the Government say that it is allowed to spend. It already spends well above SSA in schools. The Government need to consider this important point because school governors are worried about the future of their school.

Ms Morris: I am delighted to tell the hon. Gentleman that schools now do not have to have huge class sizes in order to get extra money, as they had to do when his party was in power. It is clear that the school to which he refers and many others in his constituency and local authority will have money to reduce infant class sizes and will receive a share not only of the extra £19 billion that will be put into education over the next three years but, I suspect, of the 20,000 extra teaching assistants that will be funded through the standards fund. I know that the hon. Gentleman omitted to say, because of lack of time, that he very much welcomed the £0.5 million extra money that his area received to reduce class sizes last September and the reduction by more than 1,000 of five, six and seven-year-olds in Dorset now in classes of over 30.

Miss Melanie Johnson: Will my hon. Friend develop further her comment about the 20,000 extra classroom assistants and their contribution, together with lower class sizes, to improving standards in our schools? How does she expect them to contribute to making teachers even more able to do the job that they are there to do?

Ms Morris: The extra 20,000 classroom assistants are one of the most important policies in the Green Paper on the reform of the teaching profession. For too long they


have been an ignored group of people. They contribute a great deal to standards in schools and among individuals. I am delighted that for the first time they can be assured of proper training and a proper place in the education of our children. I pay tribute to the good work that they have done and that they will do when there are more of them under this Government.

Mr. David Willetts: Does the Minister accept that a survey by another group of our friends in education, the National Association of Head Teachers—[Interruption.] They are all on our side now because they recognise the consequences of the rigid implementation of the Government's pledge on class sizes. The association shows in its survey that there are more larger classes in junior schools for eight, nine and 10-year-olds as a direct consequence of the rigid implementation of the pledge. Does the Minister not understand that schools also have more mixed-year classes and, despite what she said a moment ago, that there is still per capita funding for schools? Schools are having to turn away children whom they would have been happy to educate and they are losing funding as a result. Does the Minister not understand that that is a consequence of the rigid implementation of the pledge?

Ms Morris: I have never heard so much twaddle in my life. How on earth can the hon. Gentleman quote a figure in a survey and claim that there are more junior school children in large classes as a consequence of the infant school policy when the children educated in smaller classes cannot possibly have reached the ages to which he referred? That is absolute nonsense. The policy has not yet been enacted in full, but it will be in two years' time. The hon. Gentleman cannot have it both ways. He cannot change his mind since the general election and now claim that class size matters while he objects to every penny that we put in and every action that we take to deliver our pledge to parents and pupils. His local authority received £1 million of capital funding to reduce class sizes last September. It has gained from our policy. He and every

other Member of Parliament will see five, six and seven-year-olds in classes of no more than 30 and junior school pupils benefiting from the extra resources put into education as a whole.

Reception Classes

Mr. A. J. Beith: What estimate his Department has made of the number of four-year-olds in reception classes; and if he will make a statement. [64048]

The Parliamentary Under-Secretary of State for Education and Employment (Ms Margaret Hodge): In January 1998, 350,959 four-year-olds were in maintained reception classes in England.

Mr. Beith: Is the Minister aware that in rural Northumberland, where successive local government settlements have left schools desperately underfunded, schools feel under pressure to take in four-year-olds to maintain their position at the expense of the viability of play groups? As there are so many four-year-olds, will there be a curriculum for them along the lines of the foundation key stage about which the Minister spoke before Christmas? Or shall we finish up with four-year-olds in sets, as recommended by the chief inspector?

Ms Hodge: What matters is not so much the setting in which a child receives that pre-school experience, but the nature of the experience itself and we are focusing on that. That is why we have asked the Qualifications and Curriculum Authority for proposals to review the desirable learning outcomes. Like the right hon. Gentleman, we recognise that what count are skills in listening, speaking and working together, in persistence and co-operation. We shall pursue that agenda and there is no question at all, in anything that has been said, relating to setting.

Business of the House

Sir George Young: Will the Leader of the House tell us the business for next week?

The President of the Council and Leader of the House of Commons (Mrs. Margaret Beckett): The business for next week will be as follows.
MONDAY 18 JANUARY—Opposition Day [3rd Allotted Day]
Until about 7 o'clock, there will be a debate entitled "Rationing in the NHS", followed by a debate entitled "Pensioners and Dividend Tax Credits". Both debates will arise on Opposition motions.
TUESDAY 19 JANUARY—Consideration in Committee of the Greater London Authority Bill.
WEDNESDAY 20 JANUARY—Until 2 o'clock, there will be debates on a motion for the Adjournment of the House.
Conclusion of consideration in Committee of the whole House of the Greater London Authority Bill.
THURSDAY 21 JANUARY—Remaining stages of the Road Traffic (NHS Charges) Bill.
Second Reading of the Scottish Enterprise Bill.
FRIDAY 22 JANUARY—The House will not be sitting.
The provisional business for the following week will be as follows:
MONDAY 25 JANUARY—Second Reading of the Sexual Offences (Amendment) Bill.
TUESDAY 26 JANUARY—Opposition Day [4th Allotted Day].
There will be a debate on an Opposition motion, subject to be announced.
WEDNESDAY 27 JANUARY—Until 2 O'clock there will be debates on the motion for the Adjournment of the House.
Second Reading of the Tax Credits Bill.
THURSDAY 28 JANUARY—Motions on the Social Security Benefits Up-Rating Order, The Social Security (Contributions) (Re-Rating and National Insurance Fund Payments) Order and The Guaranteed Minimum Pensions Increase Order.
FRIDAY 29 JANUARY—The House will not be sitting.

Sir George Young: As we meet today for the first time on a Thursday morning, as an experiment, can the House be assured that the new arrangements will be monitored by the Modernisation Committee, to help us to decide whether the experiment should be made permanent? Part of the Government's modernisation package was a constituency week in February. Will the Leader of the House tell us what has happened to that?
On House of Lords reform, can the Leader of the House confirm press speculation that the Bill will be published next week; will the White Paper be available in good time for the Second Reading debate; and will there be a statement to the House on the setting up of any royal commission on the constitution? Finally in relation to the House of Lords, I have asked on many occasions whether all the stages of the constitutional Bill could be taken on

the Floor of the House. I have had no satisfaction, and the time has come for the Leader of the House to give a clear assurance that that convention will be respected.
On the Sexual Offences (Amendment) Bill, will the Leader of the House confirm that the key issues of conscience on the age of consent will be taken on the Floor of the House, and on a free vote?
Finally, may we have a debate in Government time on benefit fraud, to clarify the confusion that has arisen from certain assurances about resources given by Ministers on Monday which have been challenged both by local authorities and by Benefits Agency investigators?

Mrs. Beckett: I can confirm that it was quite explicit that the experiment—of which the first day is today—was indeed an experiment. The monitoring will be a matter for the Modernisation Committee, but in relation to conclusions, I should like to point out delicately to the right hon. Gentleman that, as we are only hours into the first day, it is a little early to worry about conclusions, although the House will rightly want to consider how we proceed on the matter.
The right hon. Gentleman also asked—I did not quite catch his question as someone was murmuring in my ear—about a potential non-sitting week in February. I remind him that I said during our debate about the experiment that I was not able to give an assurance that it would be possible to find time in the present Session. The Government are mindful of hon. Members' wishes to have a clear picture of the path of Government business and debates and consideration in the House in the months ahead, and to receive notice of when decisions may be made. However, the right hon. Gentleman will appreciate that the Government face a great deal of heavy business at present and that this part of the Session has barely begun. I cannot, therefore, at present confirm that we will feel able to put aside time in this Session, although we shall obviously keep the situation under review.
The right hon. Gentleman asked about the handling of legislation to reform the House of Lords. The Government hope to publish the Bill and the White Paper next week—so, yes, we intend to provide proper time for hon. Members to study both the White Paper and the Bill. As the right hon. Gentleman said, he has raised previously the issue of whether all the Bill's proceedings should be taken on the Floor of the House. I have said before that the Government intend to respect normal conventions and that the matter will be discussed through the usual channels. That remains our position. The right hon. Gentleman need not feel the unease that he expresses.
The right hon. Gentleman also referred to the Sexual Offences (Amendment) Bill. That matter can be discussed through the usual channels, but the Government at least intend to recognise the fact that it is in some ways a matter of conscience. I anticipate that that recognition will underlie our decision, but we shall discuss the matter through the usual channels.
Finally, the right hon. Gentleman asked me to find time for a debate on benefit fraud, consequent on earlier exchanges. I. am not immediately familiar, with those exchanges, but I shall undertake to draw the right hon. Gentleman's observations to the attention of the relevant Ministers. I cannot, however, undertake to find time for that debate in the near future.

Mr. Tam Dalyell: As chairman of the all-party Latin America group, I wish to know whether there will be a statement next week—possibly froni a Treasury Minister—about the implications of the bank crisis in Brazil. Furthermore, will there be a statement before my Adjournment debate on Monday 25 January about the French proposals in relation to Iraq and the lifting of sanctions? Will my right hon. Friend and her colleagues look favourably at my ten-minute Bill, the Military Action Against Iraq (Parliamentary Approval) Bill, which asks simply that there be a formal vote in the House of Commons regarding any further bombing of Iraq and that any such action be supported by a two-thirds majority?

Mrs. Beckett: I recognise the concern that my hon. Friend has expressed about events in Brazil and I understand his wish for that issue to be raised with Treasury Ministers should matters develop in a damaging direction. I understand that my right and hon. Friends, together with others in the international community, are doing all that they can to ensure that there is no crisis in Brazil of the kind that might lead to demands for a statement. My hon. Friend will have seen that my hon. Friend the Financial Secretary to the Treasury is on the Front Bench, and she will certainly bring his views to the attention of my right hon. Friend the Chancellor.
My hon. Friend asked also for a debate about the French proposals regarding sanctions. That matter is being considered internationally and my right hon. Friend the Foreign Secretary has discussed it with the French Foreign Minister. We are looking carefully at those proposals, although I am sure that my hon. Friend appreciates that they raise other difficult issues. It is not clear that we shall be able to make a statement on those matters before my hon. Friend seeks to raise them again.
My hon. Friend also asked about his ten-minute Bill. I take his point on that, but the Government strove to keep the House as fully informed as we possibly could about how matters were handled, and we continue to do so. I am sure that my hon. Friend, like all Members, while wanting the Government to keep the House fully abreast of events, would not want us to do so in a way that would jeopardise our armed forces.

Mr. Paul Tyler: First, when does the Leader of the House expect the Government to make proposals for the implementation of the recommendations of the Neill committee on the funding of political parties? What arrangements will be made for the House to be kept informed and to have an opportunity to debate those proposals?
Secondly, will the right hon. Lady arrange for the Foreign Secretary to make a statement next week on the serious breakdown of confidence between the European Parliament and the European Commission, which touches the interests of the country and the House? She will have noted that the Liberal Democrat Members of the European Parliament and their group are the only people to resist the Commission's attempts to blackmail the Parliament into submission and that the Socialist and Conservative groups are now split and have been bought off.

Mr. Iain Duncan Smith: The Liberal Democrat group is not big enough to split.

Mr. Tyler: It is bigger than the hon. Gentleman perhaps realises. Can we have an urgent statement that includes Government proposals for improving accountability in the European Union?
Thirdly, the Leader of the House may recollect that in July I asked her predecessor about proposals to charge our constituents and others who visit the House during the summer recess. I raised that issue again in a debate on 16 December, and there is now early-day motion 145.
[That this House is opposed to the introduction of charges for the admission of visitors to the Palace of Westminster.]
I understand that the other place has decided that it would be inappropriate to restrict by the considerable charge of £6 or £7 our constituents' access to Parliament. Will the Leader of the House urgently consider the issue and give the House an opportunity to debate it before any decision is made?

Mrs. Beckett: I am not in a position to tell the hon. Gentleman how speedily the matters on the Neill report will proceed. I shall find out whether it is possible to tell him and, if necessary, write to him and copy my reply to other hon. Members.
The hon. Gentleman referred to events in the European Parliament. He made a passing comment of enlightenment to a Conservative Member, and he is correct to say that the European Parliament group to which the Liberal Democrats belong is large. However, I utterly reject, as most other hon. Members will, his suggestion that only the Liberal Democrat MEPs and their group are concerned about the management of affairs in Europe or about fraud. The Christian Democrat group and the Socialist group have made it plain that there is a need for strong measures to improve the financial management of resources in the European Union, which, along with the need for close scrutiny, I understand to be the burden of the resolution that has been carried.
With regard to the hon. Gentleman's remarks about the significance of the Liberal Democrats' group being the only one to vote, I presume, for the dismissal of the Commission, that suggests that it is the only group in the European Parliament irresponsible enough to have done so. He ought to bear that in mind.
I cannot read my notes. The hon. Gentleman referred to Government accountability on another issue. Will he refresh my memory as to what it was?

Mr. Tyler: Charging.

Mrs. Beckett: Fine. That is a genuinely difficult issue because every hon. Member would be concerned at the notion that access to the House would not be free to our constituents. However, the request that was made and is being considered by the relevant House Committees—it has not yet reached the House of Commons Commission—related to the building being open during the recess when it is anticipated that large groups may wish to tour. Obviously, this brings costs to both Houses, and I think that the Accommodation and Works Committee was striving to balance the costs incurred in


opening the building more fully to visitors with the question of access. It is a difficult issue, which I understand will arouse great sensitivities in this House as in another place. The proposal has not yet come before the Commission. No decision has yet been taken, but I have taken note of views already expressed to me from all parts of the House.

Mr. David Winnick: I am wholly opposed to charges in any circumstances.
Is my right hon. Friend aware of the deep concern about the fact that while we are waiting for the outcome of the inquiry into the circumstances of Stephen Lawrence's death and what occurred afterwards, the one police officer who was to have faced disciplinary charges is taking early retirement? Does she not think that we should have a statement? Is my right hon. Friend further aware of the deep distress felt first and foremost by Stephen Lawrence's parents and of the general feeling that the police officers who acted wholly inappropriately are escaping any form of disciplinary hearing? What has happened in this case—the previous Government refused to take any action, but the present Home Secretary of course set up the inquiry in this Parliament—remains a cause of great and continuing concern.

Mrs. Beckett: First, I thank my hon. Friend for reinforcing so promptly my remarks to the effect that there is clearly concern among all parties about charging for entry to Parliament.
Secondly, of course, the whole House understands and sympathises with the sense of frustration felt by the Lawrence family about the long-term effects of the way in which the tragic attack on Stephen Lawrence was handled. My right hon. Friend the Home Secretary will be considering the matter in the light of Sir William Macpherson' s report. I know that my hon. Friend will be looking for opportunities to raise this matter in a variety of ways and at some length, and Home Office questions are to be held on Monday.

Mr. Peter Brooke: When the Leader of the House constructively answered my question on 3 December about the procedural consequences of devolution, she made no reference to her own memorandum dated 24 November. Although the Government have now postponed the first operational date for the Northern Ireland Assembly from 1 February to 11 March, time remains extremely short. Will she confirm that the memorandum went to the Procedure Committee in late November and was not delayed until the middle of December, which is when it first became known to the House at large?

Mrs: Beckett: Frankly, I have to tell the right hon. Gentleman that I cannot quite remember when the memorandum went to the Procedure Committee, but it was certainly some time ago. I did not refer to it when he raised the matter with me because it was in the hands of the Committee; and I understand that it has now been put more fully into the public domain. I am sorry, as I know the Committee will be, if the right hon. Gentleman feels that it has held things up. I cannot quite remember when

the memorandum was passed to the Committee—time flies—but if I have anything to add, I shall write to the right hon. Gentleman.

Mr. Eric Illsley: Will my right hon. Friend arrange an early debate on millennium compliance, as the millennium is now fast approaching and in view of the fears expressed by TaskForce 2000 that some systems will simply not be ready in time? May we have an early debate so that we can identify any problems that remain?

Mrs. Beckett: I cannot promise my hon. Friend such a debate in the near future. However, it is not only TaskForce 2000 which has been dealing with such matters—it operated under the previous Government—as a range of organisations, including Action 2000, is now doing the same and is continually seeking to ensure that as many people as possible, especially those involved in small and medium-sized businesses, begin to tackle the problem. It would be quite a task to try to identify all the areas that might not be completely ready. I do not think that anyone in any organisation anywhere in the world will be able to say with absolute confidence that he is wholly ready. As this matter is studied more fully and in greater depth, the dimensions of the potential sources of difficulty unwind and the greater the problem seems to be.
It would be for the good of all, nationally and internationally, if everyone in public life raised these matters with their local authority, with small businesses in their constituencies and with all those with whom they come into contact. The first step is to prioritise the action that needs to be taken, to take as much of that action as possible, and for people to make contingency plans for unforeseen developments.

Sir David Madel: As a former Minister in the Department of Education and Science, the right hon. Lady has always taken an interest in the education service. She will know of the excellent work of the Office for Standards in Education in strengthening and supporting the teaching profession. However, Ministers in the Department for Education and Employment seem silent on this matter. Could we have a clear statement next week? Do the Government and the DFEE support Ofsted and the chief inspector in their valuable work?

Mrs. Beckett: Frankly, I am a little surprised by the hon. Gentleman's question, especially as we have just had education questions. The Government work with Ofsted. We want everything possible to be done to raise standards. That is the task of Ofsted, and in that sense we work well together.

Mr. Jim Cousins: Has the Leader of the House seen the press reports that suggest that the Government are considering the introduction of regional Committees? Will she comment on that? Twice last year, I asked my right hon. Friend's predecessor to recall the Standing Committee on Regional Affairs, which, although it has not met since 1978, could be recalled tomorrow. At its first meeting, it could discuss the economic opportunities facing north-east England.

Mrs. Beckett: We are very keen to recognise the need to take account of the regional dimension in England. We


are conscious of the view held by many hon. Members that the interests of the English regions have to some extent been overlooked in recent years. I intend, I hope in the very near future, to put some proposals before the Modernisation Committee on the use of procedures of the House that allow for a Standing Committee on the English regions. It may not b+9e in the form implied by my hon. Friend's question, but it would be in a form that would, I hope, be of assistance to the House.

Mr. Charles Wardle: The debate to follow is about public accounts and the National Audit Office. Will the right hon. Lady find time in the near future for a debate on the work of the Audit Commission, particularly its assessment of county councils? Is she aware that East Sussex county council pays private sector residential care homes less than any other county council? It pays £12 per week per resident less than the Department of Social Security's recommended rates, because its social services department subsidises its own more costly beds to the disadvantage of the private sector. Is that an appropriate subject to raise in a debate on the Audit Commission?

Mrs. Beckett: The hon. Gentleman would be able to raise that matter in a debate on the Audit Commission, but I cannot find time for that in the near future. I hear what he says, and I was not aware of the issue. As I understand it, the council is controlled by the hon. Gentleman's party, so he could use other means to raise the matter.

Mr. Dale Campbell-Savours: May I again ask my right hon. Friend for a debate on the lending practices of the banks? In particular, we should discuss the outrageous conduct of the National Westminster Bank and Lombard Banking, including the way in which they have treated the Tanning Shop franchisees nationally. That subject is known to hon. Members. When we finally have that debate, I shall be able to argue the case for Mr. Robert Munn and Mr. Peter Stern to be questioned about what really happened inside National Westminster Bank and about the outrageous and almost dishonest treatment of many of the bank's clients.

Mrs. Beckett: I am aware of my hon. Friend's great concerns about this matter. As he said, he has raised the issue with me before and I understand the anxieties that he has expressed. I fear that I cannot undertake to find time for such a debate in the near future, but I recognise that it is a matter that he may continue to raise

Mr. Howard Flight: On Monday, my hon. Friend the Member for Gainsborough (Mr. Leigh) and I asked the Under-Secretary of State for Social Security, the hon. Member for Wallasey (Angela Eagle), certain questions about the adequacy of resources for pursuing benefit fraud, and for an undertaking that there were absolutely no cuts taking place in that matter. In view of the cases that have been cited in three eminent newspapers this week, will the Leader of the House ask the Minister to come back to the House with an explanation for a reply that was at best misleading but potentially baseless?

Mrs. Beckett: That matter was raised earlier and I said then that I was not aware of the concerns mentioned by

Conservative Members. I will draw those concerns to the attention of the relevant Department. All I would say is that it is sometimes dangerous to place too much reliance on stories that appear in newspapers.

Mr. Mike Gapes: Can my right hon. Friend find time for an early debate on the successful launch of the euro so that the House can have an opportunity to discuss the implications for our economy over the next three or four years, as well as the continuing bitter divisions and splits that still exist within the Conservative party on that issue?

Mrs. Beckett: I greatly respect the interest that my hon. Friend has taken in these matters over many years. However, I believe that the divisions in the Conservative party are diminishing as the rampant anti-Europeans take control. I agree with my hon. Friend that the euro has been launched successfully. He will recall, as I do, the many occasions on which the idiots on the Conservative Benches said that it would never happen. [HON. MEMBERS: "Withdraw!"] I spoke in the heat of the moment, Madam Speaker; of course I withdraw that comment. I shall seek other words to describe my concerns. The folly of what was said does not cast light on the wisdom of the hon. Members who have made such remarks.

Madam Speaker: I am grateful to the right hon. Lady for her gracious remarks.

Mr. Andrew Rowe: This week, Kent Members had a briefing from Kent police, who have made it abundantly clear that the public perception that the bootlegging that goes on across the Channel is causing crime is grossly understated and that, in fact, major crime syndicates are moving into Kent and changing the whole nature of the crime prevention policy. Can we have a debate on that serious issue from a Government who, after all, took office on the basis of being tough on crime, tough on the causes of crime? This is one of the most blatant causes of crime and it goes a great deal wider than any benefit that the Treasury might be deriving from a difference in duty.

Mrs. Beckett: I share the concern expressed by the hon. Gentleman—as I am sure do hon. Members in all parts of the House—at the way in which that fraud is being exacerbated and offering an opportunity for crime. I am sure that the hon. Gentleman will take an opportunity to raise those concerns with Treasury Ministers. However, he will know that it is not a simple matter to make major changes in the structure of our taxes and duties. Indeed, Conservative Members are usually calling on the Government to be careful about how we do such things. There is certainly great consciousness of some of the difficulties that are arising and the Government keep the matter under active consideration.

Mr. Gordon Prentice: The BBC has told us today that we are entering a new phase in the Lib-Lab deal with the meeting later today of the joint consultative committee with the Liberal Democrats to discuss foreign and defence policy. Given that the papers will be classified and denied to Labour Members and the fact that we are all becoming weary of the endless speculation about Lib-Labbery, where it will take us and what


precisely is in the Prime Minister's mind—[Interruption.] I say this in all seriousness—will the Leader of the House prevail on the Prime Minister to make a statement to the House next week on the Lib-Lab deal, the constitutional implications and precisely where it is all leading us?

Mrs. Beckett: I am very clear, as I think that all hon. Members are very clear, about what is in the Prime Minister's mind—to continue making successful progress on the Government's policies, which have led, for example, to 100,000 children in smaller classes, 200,000 people taking advantage of the new deal and the creation of 500,000 new jobs since the Government came to power. My hon. Friend asks about the use of a Committee to discuss various issues with the Liberal Democrats. Yes, it is intended that that group will consider some foreign and security policy issues, along the lines of previous discussions on constitutional matters on which there is genuinely common ground and agreement. It is sensible for people to work together on such issues. My hon. Friend has attended business questions today and will have noticed that there are a great many issues on which the Government and the Liberal Democrats diverge, as I am sure that Liberal Democrat Members will be happy to confirm.

Mr. John M. Taylor: May we have a reprint of the list of ministerial responsibilities? The current one dates back to October and seems to be showing some signs of attrition. Will she also confirm that the remedy of impeachment is still available to this honourable House?

Mrs. Beckett: I shall certainly draw to the attention of the relevant authorities the hon. Gentleman's request for a reprint of the list of ministerial responsibilities. I shall refrain from commenting on his other remarks, as all sorts of comparisons spring to mind of people misusing such remedies for partisan purposes and doing their country no good in the process.

Mr. David Watts: Following the Government's decision to pay compensation to GCHQ workers, will my right hon. Friend make time in the House for a debate on employment rights? Does she agree that such a debate would give Conservative Members an opportunity to apologise to loyal hard-working people who were sacked for no reason other than that they wanted to be members of a trade union?

Mrs. Beckett: I am grateful to my hon. Friend. I anticipate that, as the Government proceed with their legislative programme, there will indeed be time for a discussion of employment rights. I share his view that the treatment of workers and former workers at GCHQ was shabby and contemptible. I am glad that the Government have had the opportunity to put it right.

Mr. Mike Hancock: Will the right hon. Lady prevail on her colleagues in the Ministry of Defence to come to the House for a debate on the reasoning behind the closure of the Royal Hospital Haslar? If she cannot do that, will she prevail on her colleagues at the Department of Health to come to the House for a debate on how they will fund and provide

adequate health services to cover the population of Greater Portsmouth? There is widespread concern across half a dozen constituencies about the future of health provision in the Greater Portsmouth area.

Mrs. Beckett: Hon. Members will be able to ask questions in Defence Question Time, in just over a week. The hon. Gentleman will have an opportunity to raise the issue on that and on other occasions with my right hon. and hon. Friends with responsibility for health and defence issues. I cannot promise a special debate on the problems of hospital provision in his area, but he may like to take advantage of the opportunities that arise for hon. Members to apply for Adjournment debates.

Dr. Stephen Ladyman: My right hon. Friend will be well aware that the United Kingdom's assisted area status map is being redrawn. She will also be well aware that, before Christmas, there was a small opportunity for a debate on the subject, although many hon. Members were frustrated in that debate. Will she provide an opportunity as soon as possible for another such debate, so that I can make the point to hon. Members that it is vital for Thanet, which has the third highest unemployment level in England, to retain full assisted area status and objective 2 status? Will she, please, provide that opportunity?

Mrs. Beckett: I cannot undertake to provide an opportunity for a debate on that in the near future, particularly as we had a debate on it only recently, as my hon. Friend kindly recognised. I understand and share the frustration that is always felt by some hon. Members when there is not time for everyone to be called. However, I am confident that my hon. Friend will seek other opportunities to make his point.

Mr. Michael Jack: The Leader of the House may be aware that the Minister of Agriculture, Fisheries and Food has recently begun a nationwide consultation exercise on reform of the common agricultural policy. Does she agree that, to avoid discourtesy to the House, it would be proper for there to be a debate in Government time on the reform package? So far, the Minister has not consulted the House. He is giving the impression in the country that what farmers say will have far more influence than will really be the case. It is time that the House had an opportunity to probe the Minister on that important subject and to give its view on the reforms.

Mrs. Beckett: The right hon. Gentleman is being uncharacteristically ungenerous to my right hon. Friend. It is right, sensible and wise for us to encourage those involved in UK agriculture to put forward their views. I should have thought that the right hon. Gentleman would agree and would play his part in encouraging that.

Mr. Jack: A debate?

Mrs. Beckett: Of course there will be opportunities for Members of Parliament to make their points of view known, but when that debate eventually comes—I cannot promise one in the near future—it will be better informed if those in the industry have had an opportunity to make their points fully. It makes for better government if people are encouraged to put forward their views early in a


discussion on reform rather than waiting until Government views have gelled more fully, without the advantage of that input of information and advice. I hope that the right hon. Gentleman will encourage the farming industry to respond to my right hon. Friend's appeal.

Mr. Christopher Leslie: Can we have a debate soon about town planning and unitary development plans? I refer in particular to a long-running planning application in my constituency for an outrageous 400 houses at Warren lane, Gilstead in Bingley. The proposal has raised several issues, including whether privatised water companies such as Yorkshire Water can withhold information about drainage networks from local councils on the grounds of commercial confidentiality and the woeful inadequacy of the Conservative Government's town planning legislation, which did not give residents the ability to shape the outcome of local planning decisions properly.

Mrs. Beckett: I sympathise with my hon. Friend's concerns. All hon. Members are conscious of the enormous impact of planning decisions and how fiercely fought they often are locally. My right hon. and hon. Friends at the Department of the Environment, Transport and the Regions have the issues under consideration and review. I am sure that they will take on board my hon. Friend's comments.

Mr. Paul Burstow: I should like to draw the attention of the Leader of the House to early-day motion 182 on council tax benefit subsidy limitation:
[That this House deplores the unfair anomaly of relatively low income council tax payers subsidising the payment of council tax benefit that is to be introduced by the Government through statutory instrument and the Local Government Bill; condemns the totally unacceptable principle that the poor should subsidise the poorest in this way; regrets that the matter will not be subject to full parliamentary scrutiny; and urges the Government to reconsider this unfair and ill-considered measure.]
Early-day motion 150 is similarly about limitation of housing benefit and council rents. Does the right hon. Lady agree that it is important that we should have an opportunity for a proper debate on the Floor of the House about the Government's intention to introduce a new clawback of council tax benefit subsidy? The issue should not be sent to a Committee and dealt with through secondary legislation and regulations. It is a fundamental issue of the poor paying for the poorest. The Conservatives introduced that principle when they were in government. Why are the Labour Government copying them?

Mrs. Beckett: The hon. Gentleman makes an important point about the handling of local government subsidy matters. I am confident that his concerns are part of the consideration of my right hon. and hon. Friends at the Department of the Environment, Transport and the Regions. However, the House decided that many matters of detail relating to the implementation of Government decisions and the handling of issues such as benefit subsidy should be taken away from the Floor of the House. That decision was taken because it was believed

to be for the better management of Government business. I am confident that the hon. Gentleman will have opportunities to raise the issue, but I fear that I cannot promise an early debate.

Mr. Robert Syms: May I ask the Leader of the House for a statement on fraud and nepotism in the European Union, so that hon. Members can seek assurances not only about what the Government are doing about such problems with their apparently new-found influence in Europe, but that they will never give up the rebate that was negotiated by that great British patriot, Margaret Thatcher?

Mrs. Beckett: We have made clear from the outset, not only in government but in opposition, our strong opposition to fraud and our concern at incompetence and fraud in the handling of public moneys, particularly in the European Union. It has been made clear repeatedly from the Dispatch Box and everywhere else that the Government have no intention of giving up the rebate. As for the pretence that only the Conservatives defend the interest of the United Kingdom, they may have got the rebate, but they gave up the veto.

Mr. John Wilkinson: Following the pertinent concerns of the hon. Member for Linlithgow (Mr. Dalyell) about the financial crisis in Brazil, will the right hon. Lady grant the House an urgent debate on foreign affairs so that we can discuss that crisis and the associate Mercosur country next door, which is being jeopardised by the Government raising the political temperature there and deterring the inward investment on which it depends? I refer of course to Chile.

Mrs. Beckett: As my hon. Friend the Member for Linlithgow (Mr. Dalyell) said, the handling of the economy of Brazil is a matter for the Treasury rather than for the Foreign Office, but I repeat what I said earlier: the Government are concerned to ensure that no such crisis arises. As for the hon. Gentleman's later remarks, he will be aware of the House's ruling on matters that are sub judice and I do not propose to respond to his attempts to raise them.

Miss Julie Kirkbride: Will the Leader of the House make a statement to the House next week accepting the kind offer of Mrs. Elizabeth Filkin, the Parliamentary Commissioner for Standards, to look into the affairs of Ministers in the same way as she looks into the financial and other affairs of hon. Members? Does she agree that it would be particularly appropriate in the light of recent revelations that the right hon. Member for Hartlepool (Mr. Mandelson), the former Secretary of State for Trade and Industry, accepted a loan from the former Paymaster General of £373,000 which he could not repay, to pay for a house that he could not afford at the time when his Department was looking into the affairs of the former Paymaster General, and that he failed to inform the permanent secretary? Would that not also be appropriate because of the further revelations in The Times today about Lord Donoughue, a Minister in the other place, who was also financially involved with that crook, Robert Maxwell, who robbed the Maxwell pensioners? If the


Government are determined to be whiter than white as the Prime Minister once said, would it not be appropriate to accept the offer?

Mrs. Beckett: That was a very long question; indeed, it was more of a dissertation, the core of which was the question whether the Government propose to take up the offer made by the new Parliamentary Commissioner for Standards. Of course it was sensible for Mrs. Filkin to say that she was prepared to take on the matter, but the hon. Lady may or may not be aware that the Neill committee is looking again at how such issues are handled, reassessing what we have learnt from experience. It is a matter of consideration and judgment. I am not persuaded that it is quite the right way to handle those matters for the parliamentary commissioner to take on that role—[Interruption.] Perhaps the right hon. Member for Bracknell (Mr. MacKay) could stop heckling, as I do not think his wife needs any support from him.
In my view, different issues can arise involving the conduct of Ministers and what happens within Departments that it might not be right for the parliamentary commissioner to explore. It is genuinely a matter that needs to be considered without the need for knee-jerk and immediate results. I have some reservations about whether it is Mrs. Filkin's role, although the matter will be examined.

Rev. Martin Smyth: The Leader of the House will be aware that, as a result of the changed timings of Thursday sittings, there will be a motion tonight to change the sitting next week of the Northern Ireland Grand Committee. Could she explore why an understanding that the Northern Ireland Grand Committee would meet at least once or twice in Northern Ireland last year was not kept up—and will not be kept up this year unless there is a change? Is it because 25 Labour Members of Parliament do not want to travel there, or is there some other reason?

Mrs. Beckett: I was not aware of the concerns that the hon. Gentleman has raised. If there is a feeling that an undertaking that the Grand Committee should meet in different places has not yet been fulfilled, that will be of concern to my right hon. Friend the Secretary of State for Northern Ireland. I undertake to draw the matter to her attention, and I will write to the hon. Gentleman.

Mr. Dennis Skinner: As a follow-up to the question from my hon. Friend the Member for Pendle (Mr. Prentice), may I say that it is not true that the Liberal Democrats agree with the Labour party about all constitutional issues? There are differences between us on devolution, there is a very stark difference about what is to happen in the House of Lords after the first stage, there are without doubt differences on defence and there are certainly differences on foreign policy. Frankly, some of us are fed up to the back teeth with the Liberals wanting to have their cake and to eat it. It is high time that a message was passed to the Prime Minister, or anybody else, that it is time to put a stop to it. I am old enough to remember the Lib-Lab pact leading up to 1978, and it

ended in tears. The Liberals ratted when it got too hot, because they could not stand the heat in the kitchen. We do not want a repeat performance—sack the lot of them.

Mrs. Beckett: I fear that I might not please you, Madam Speaker, if I were to venture to comment on many of my hon. Friend's points. I accept that there are issues—particularly constitutional issues—on which the Liberal Democrats and ourselves do not see eye to eye. What I intended to say earlier was that, where there was agreement, it was sensible for that to be recognised. However, I fully understand that there are many areas where there is not agreement—including on some of the issues to which my hon. Friend referred.

Dr. Julian Lewis: Will the Leader of the House consider arranging for a statement next week by the Minister for the Cabinet Office on the lack of progress towards the introduction of open government legislation and, in particular, whether it is still intended that such legislation should include protection for people who blow the whistle on secret abuses, bearing in mind the very sad case of Mr. Charlie Whelan, who has recently lost his job merely for blowing the whistle on secret abuses by two of the Prime Minister's Cabinet cronies?

Mrs. Beckett: The Government have every intention of producing for scrutiny our proposals about freedom of information, and we are giving careful consideration to how they can be effective. As for Mr. Charlie Whelan, I thought that the one thing that nobody had ever accused him of was operating in secret.

Mr. John Bercow: Will the Leader of the House find time for an early statement by the Chancellor of the Exchequer, which would enable him to commit the Government to publishing a White Paper on the implications for our democracy of possible British entry to the European single currency?
In that context, is the right hon. Lady aware of the erroneous claim made last night by the Chief Secretary to the Treasury that the Chancellor's statement to the House on 27 October 1997 had addressed the constitutional issues? Will she confirm that it did nothing of the kind, but simply stated that there were constitutional issues but no constitutional bar? Does she agree that a White Paper dealing with the role of central banks, the power of national Parliaments, the health of our democracy in the future and related issues is the very least that we should guarantee our constituents?

Mrs. Beckett: The Opposition raise that issue continually, and I see no reason why we should provide time for yet a further debate on it in the near future. I have no doubt that there will be many opportunities for the publication of relevant Government documents at the right stage, and perhaps, in the fulness of time, even a White Paper; but I fear that I cannot promise the hon. Gentleman a White Paper, a debate or anything else next week.

Mr. Christopher Chope: May I return to the question put by my hon. Friend the Member for Bromsgrove (Miss Kirkbride)? Does the Leader of the House recall that, only a few weeks ago, she told the House that we should trust the then Secretary of State for


Trade and Industry to be able to make his own correct judgments about conflicts of interests, and potential conflicts of interests? In the light of events, does the right hon. Lady not feel rather let down? Does she not feel that it would be helpful to the Neill Committee, the Government and the House to have an early debate on ministerial accountability, and the fact that, at present, Ministers are the sole judges of whether conflicts of interest exist? As my hon. Friend the Member for Bromsgrove pointed out, the issue is made more pertinent by revelations about the involvement of a junior agriculture Minister with the Maxwell empire.

Mrs. Beckett: I think that my right hon. Friend the Member for Hartlepool (Mr. Mandelson) has eminently justified what I said about his recognising where conflicts of interests arose. He has acknowledged that he made a mistake, and he has paid the price—unlike Ministers in the last Government.

Mr. James Paice: Last week, the Government published figures showing that the tuberculosis outbreak in our cattle herds is still exploding, and is now doing so at an even faster rate. May we have a debate on that as a matter of urgency, so that the Minister can explain to the House why, just over a year after the Krebs report, only six of Professor Krebs's proposed 30 study areas have been identified, and the study has already been suspended in the case of two of those six because of a lack of resources? That means that the British tuberculosis-free status is now in jeopardy, as are hundreds of farmers' livelihoods—especially given the fact that the Minister of State, Ministry of Agriculture, Fisheries and Food has said repeatedly that this is a crisis second only to the BSE crisis.

Mrs. Beckett: I fear that I cannot promise a debate in the near future, but I am aware of the concern in the industry. Concern has also been expressed in the Ministry, and I shall draw the hon. Gentleman's comments to the attention of my right hon. Friend the Minister for Agriculture, Fisheries and Food.

Mr. Patrick Nicholls: The right hon. Lady was unable to find time for a debate on bank lending practices, but might she find time for a debate on building society lending practices? Would that not give us an opportunity to understand how the right hon. Member for Hartlepool (Mr. Mandelson) was able to sign a Britannia building society application form—happily, I have a copy with me—on which he certified that he had
not arranged any other loan
in connection with the property? As we now know, he had arranged a loan from the former Paymaster General. Would not the debate enable us to understand why the right hon. Gentleman was able to do that, given that, if an ordinary member of the public had engaged in such a practice, it would probably have been referred to the police?

Mrs. Beckett: No.

Mr. Bernard Jenkin: May I draw the right hon. Lady's attention to a matter that should concern the House, but is somewhat reminiscent of a Monty

Python sketch involving a skeleton and a telephone box? I have here a letter from the Financial Secretary to the Treasury, dated 5 January, which opens with the sentence
Thank you for your letter of 21 May to Gordon Brown.
Does the right hon. Lady suppose that my correspondence fell into a deed box and was sent off to Guernsey during the period in question? Will she undertake to mount an informal inquiry into what is happening to correspondence in Her Majesty's Treasury? This may well be the record example to date, but it is by no means the only example of delayed correspondence relating to our constituents and to Treasury matters.

Mrs. Beckett: I am afraid that, as I do not remember the sketch to which the hon. Gentleman referred, the allusion was somewhat lost on me. I do, however, understand his concern if there is delay in the handling of correspondence, and I shall draw his remarks to the attention of the relevant Ministers.
As I am sure the hon. Gentleman realises, the Treasury receives an enormous amount of correspondence. While no one could possibly think it satisfactory that he, or his constituent, had to wait so long for a reply, sometimes things slip through the net.

Mr. Nigel Evans: Would it be possible for the Leader of the House to arrange for a Welsh Office Minister to wind up the debate that we are shortly to have on national health service rationing, because three issues have recently been raised in the Welsh media? Age rationing is going on in hospitals in Wales. The lengthening time that junior doctors now have to work in Welsh hospitals is appalling and, even using the fiddled figures of the Government, there are 3,000 more people on waiting lists than at the time of the last general election.
The important point is that people are now waiting longer than before when they finally get on to the waiting list. At the general election, they were told that things could only get better, but, for many patients and people wanting medical help in Wales, things have got worse.

Mrs. Beckett: The hon. Gentleman is right in identifying that there will be a debate on health service matters in the near future, when it will be possible for those who catch your eye, Madam Speaker, to raise those issues.
Obviously, who opens and winds up particular debates is a matter for consideration. It is not for me to give the hon. Gentleman the assurance that he seeks. I am sure that his remarks have been heard.

Sir Patrick Cormack: May I ask the right hon. Lady to clarify one point about the royal commission on the House of Lords? Can she guarantee that there will be an oral statement in the House when the royal commission is set up? We would expect such a statement and the opportunity to question whoever makes it.
Can the right hon. Lady clarify, or say when she expects to be able to clarify, the position regarding the February week? We voted against the package that she put before the House before Christmas, but we believe that the House has the right to know whether we are to have that week. If we are not to have it, can she please tell us whether we shall at least have part of it?
Finally, in view of what the right hon. Lady said to the hon. Member for Bolsover (Mr. Skinner), can she give an undertaking to him and to me that, as we agree with her on PR, we can be invited to join the Cabinet Committee to discuss it?

Mrs. Beckett: Picking up on the hon. Gentleman's last point first, I do not think that anyone is suggesting that that is a feature of discussions at present, but I hear what he says.
The hon. Gentleman asks me to clarify the issue about the February week. I cannot give him any further clarification than I have already given. In the debate close to Christmas, when the matter was raised, I made it plain that it might not be possible to make such an arrangement this year, but that the Government would keep the matter under review, depending on the progress of business.
I had not intended to make the following point—indeed, I refrained from making it before—but I have noticed that all the hon. Members who have so far approached me to ask for certainty—and I understand that certainty is important to hon. Members—about whether that week will be provided, are Members who voted against our having it.
The hon. Gentleman asks me about a statement on the royal commission. It would be as well if we undertook to keep those matters under review through the usual channels. Although I fully understand and appreciate the wish of the House to be properly informed, he may find that we are able to deal with the matter in a way that may not call for a specific statement when the commission is set up, so we could perhaps undertake to keep the matter under review through the usual channels. There is no intention to deprive the House of any opportunity to comment as fully as it would wish on those matters.

Mr. Wardle: On a point of order, Madam Speaker. In her reply to me during business questions, the Leader of the House, I think inadvertently, suggested that East Sussex county council is under Conservative control. I can understand why she should think that that should be so, and I am sure that it will be the case before long, but, at present, it is not the case.

Mrs. Beckett: I apologise. I was misinformed. I did not wish to misinform the House.

Orders of the Day — Public Accounts

Mr. David Davis: I beg to move,
That this House takes note of the 1st to 67th Reports of the Committee of Public Accounts of Session 1997–98, and of the Treasury Minutes and Northern Ireland Department of Finance and Personnel Memoranda on these Reports (Cm 3880, 3893, 3894, 3936, 3955, 3973, 4004, 4015, 4021, 4041, 4055, 4060, 4069, 4075) with particular reference to the following Reports:

Twenty-seventh, Measures to Combat Housing Benefit Fraud (HC 366);
Thirty-second, Cataract Surgery in Scotland (HC 546);
Thirty-fourth, Foreign and Commonwealth Office: Irregular Payments at the British Embassy in Amman, Jordan (HC 553);
Forty-fourth, Northern Ireland Social Security Agency: The Administration of the Disability Allowance (HC 527);
Forty-sixth, The Contract to Develop and Update the Replacement National Insurance Recording System (HC 472);
Sixty-first, Getting Value for Money in Privatisations (HC 992);
Sixty-seventh, HM Treasury: Resource Accounting and Resource-Based Supply (HC 731).


In the past year, the Public Accounts Committee has published 67 reports, more than in any equivalent period in our 137-year history. Those reports ranged from a review of the home energy efficiency scheme, designed to provide warmth to the most vulnerable in our society, to a study of the operation of the Department of Social Security, which spends some £96 billion of taxpayers' money each year.
The number and variety of reports that we have produced is a testament to the quality, dedication to duty, and breadth and experience of the staff of the National Audit Office who support us. However, it is also a testament to the commitment and perspicacity of the members of the Committee, who twice a week grapple with diverse topics that require stamina, forensic intelligence and tenacity in equal measure—qualities that my colleagues on the Committee undoubtedly possess. I take this opportunity to thank all of them for their dedicated hard work.
I also extend my special gratitude to the hon. Members for Corby (Mr. Hope) and for Shipley (Mr. Leslie), both of whom had to resign from the Committee after a year of sterling work, although I am glad to say that the reason for their resignations was the happy one that they both received well-deserved promotions. I also extend my thanks to the Clerk of the Committee, Mr. Ken Brown, and to his dedicated staff, who made a formidable job possible.
Finally, I want to extend my personal gratitude to the senior member of the Committee, the right hon. Member for Swansea, West (Mr. Williams), who made his sage advice freely available to me when I had to deal with a number of rather difficult problems.
We also welcomed two new members of the Committee, the hon. Members for Halton (Mr. Twigg) and for City of Durham (Mr. Steinberg), both of whom have shown already that they will be assets to the team. The newest formal member of the Committee is, of course, the new Financial Secretary to the Treasury, the


hon. Member for Hornsey and Wood Green (Mrs. Roche), whom I am pleased to congratulate on her promotion. As well as her undoubted ability, she brings to the Committee a reputation for commitment to open government and transparency—matters that the Committee holds dear.
The Committee is steeped in the history of public service reform, the result of Gladstone's determination to raise the standards of the British civil service to unprecedented heights and to set the standards for services in the rest of the world. We have a long and learned history, but what makes the Public Accounts Committee important and relevant today—despite tumultuous change and a near-revolution in public service delivery—is its ability to grasp the nettle of change and to continue to make an impact.
That impact can be financial. Each year, the work of the NAO and the Public Accounts Committee generates substantial savings—some £365 million in 1997 alone. Those savings come from diverse areas, from controlling the cost of prison food and the redesign of benefit order books to cut fraud, to the proper of use of lottery money. The sums involved range from relatively small savings of, perhaps, £1 million to savings of tens of millions of pounds a year. To paraphrase the American billionaire Nelson Bunker Hunt, "A million here and a million there and pretty soon you're talking real money." Real money indeed: over three years, savings of £1 billion have been achieved, equivalent to £8 saved for every pound spent to run the NAO.
Saving taxpayers' cash is important, but we also have a qualitative impact. Last year alone, about 2,500 significant changes to systems in audited bodies were prompted by the Committee's work. The Committee has maintained its record over the past few years by ensuring that more than 90 per cent. of our recommendations have been accepted by the Government.

Mr. Andrew Rowe: I congratulate the Public Accounts Committee on a remarkable year's work. One of the features of the Committee is that, by and large, it examines expenditure incurred several years previously. In the case of the channel tunnel rail link, I am delighted that the Committee will look at expenditure that has yet to be finally incurred. Is that a possible precedent for the Committee's future activities? Will it be able to study likely costs before they are incurred?

Mr. Davis: I am not 100 per cent. sure of the reference that my hon. Friend makes, but the National Audit Office and the Public Accounts Committee have, historically, examined contractual arrangements that extend into the future. I shall refer to one such arrangement later: indeed, the problems of hindsight and of creating lessons for the future will form a major theme of my speech. I will press on as I have much to say and I do not want to take up too much time.
It is no accident that since Gladstone's reforms—indeed, only since those reforms—the British civil service has become a worldwide watchword for honesty and commitment to public service. That is a reputation that we treasure and it is one that our Committee seeks to defend by its actions. The Committee's effectiveness depends and rests on accountability. We have the most impact when we can hold those truly responsible to

account for failures and weaknesses in policy implementation. The British tradition of accounting officers, who are responsible to Parliament for the work of their Departments, is a cornerstone of our constitution and it is one that must not crumble.
Recently, I have become concerned that some accounting officers are not taking their responsibilities to Parliament as seriously as they should. Perhaps a few examples will illustrate that. The first may sound trivial, but it is not. At the hearing on the millennium threat, I asked the accounting officer of the Office of Public Service—the man responsible for dealing with the millennium bug—whether he would be available to report back to the Committee in February 2000, which seemed a reasonable request at the time. It was not his fault, but he promptly responded that he would retire a few months before the date at which the bug took effect, just before the turn of the year 2000. Although it was not his fault, it is indicative of an attitude to accountability that the single civil servant who has a time-limited task will not be in place for it.
More sombrely, following the fraudulent loss of £333,000 from the British embassy in Amman, the accounting officer from the Foreign and Commonwealth Office told the Committee in February 1997 that he had made improvements to financial controls his top priority. He gave my hon. Friend the Member for Bexhill and Battle (Mr. Wardle) the assurance that he was, "as sure as anybody" that no additional fraud had taken place. One year on, his successor was in front of the Committee, this time to explain a further £100,000 fraud at the same embassy. To be fair, that accounting officer appears to be taking the Committee's comments extremely seriously, as he should.
Accounting officers must also pay Parliament the courtesy of keeping the Committee informed of key developments on issues in which we have taken an interest. This Session, one of our more important reports was the 46th report on the private finance initiative contract for the new national insurance recording system. We were concerned about the delays in the delivery of the system. However, in a response to our report, which was issued in September, the Department did not inform us about the continuing and worsening problems with the system. Instead, it chose to reveal the true picture in a written answer in November, which explained that it was experiencing further problems affecting benefit claims for as many as 300,000 people, many of whom were pensioners. There was a major crisis in a system that had so recently been the subject of a critical report by the Committee. Clearly, that should have been brought to our attention. The Department's response was unsatisfactory and, no doubt, we will revisit that issue this Session.
Finally on accountability, our most recent report on the Ministry of Defence major projects statement demonstrates the tendency in some parts of Government to fail to act promptly on our recommendations. We sometimes feel that we are making the same points to a small number of Whitehall Departments year after year. In this debate last year, my hon. Friend the Member for South-West Hertfordshire (Mr. Page), who is here today, highlighted that point when dealing with the long-running problems of the British Library. This year, in the report on the Ministry of Defence's major projects, we highlight the repeated findings of the PAC of weaknesses in the procurement of defence equipment. If we wanted to press


the point, we could cite one case that predates the last Liberal Government—those with a strong sense of history will know that that was a long time ago indeed.

Mr. William Cash: Will my right hon. Friend give way?

Mr. Davis: If the intervention is brief.

Mr. Cash: It is. Has my right hon. Friend noticed the letter in The Times today from Geoffrey Martin, head of the European Commission in the United Kingdom, which suggests that much of the fraud problem in the European Union is the responsibility of national Parliaments? Does he agree that there is a strong case—as I suggested during debates on the European Communities (Finance) Bill in 1995—for closer working relations between our Public Accounts Committee—which expresses a view based on real accountability, unlike other national Parliaments—and the Court of Auditors?

Mr. Davis: I will come to European fraud later. We take an interest in that through the publications of the European Court of Auditors and our reports on them. It will be easier if I deal with my hon. Friend's comments at length when I reach that point.
I have made my concerns about accountability in Whitehall known to the Cabinet Secretary, and it is clear that he understands them. The Committee successfully combines its clear role on accountability, casting a retrospective eye over events, with a forward-looking approach. We might be accused of exercising judgment solely with the benefit of hindsight, but our purpose is not simply to criticise poor performance, but to ensure that lessons are learned. By highlighting examples of good and bad practice, we have provided Departments with practical assistance. We have placed emphasis on assisting the development of new and innovative public management techniques such as performance measurement, resource accounting and the private finance initiative.
Our forward-looking approach is illustrated most strikingly by our 61st report, the thematic report on privatisation, which drew on some 35 reports spanning nearly 20 years and containing a wealth of experience gained from studying privatisation throughout the previous Administration. The lessons that we identified will be relevant to future privatisations. I was pleased to note the Government's positive response to it. I hope that the Treasury will ensure that the lessons that we set out are spread across Government. We expect soon to publish a similar report on the lessons arising from the early PFI projects and are considering the scope for compiling good practice guidance from our work on computer failures and on the higher and further education sectors.
The Committee aims to be constructive and to react positively to developments in government. We will give criticism where it is due, but we will do so to prompt change and ensure that mistakes do not recur. To do that well, the Committee requires comprehensive rights of access for the Comptroller and Auditor General and the National Audit Office. It requires new access rights to match developments in government.
That is the first of four themes that have run through the Committee's work in the past year. There has been considerable progress in that time. The Government wisely conceded the Public Accounts Committee's request for National Audit Office access to the grants in aid for royal transport and the royal palaces. The greater transparency will renew public confidence in the monarchy.
Access to the lottery operator was essential. I congratulate the Secretary of State for Culture, Media and Sport on his willingness to drive through the necessary change in lottery legislation. I am also pleased that the Comptroller and Auditor General has been appointed auditor of all the 17 executive bodies set up by this Government. However, more could be done.
I repeat my call for the CAG to be appointed auditor of all non-departmental bodies. The current arrangements are illogical and confused. Some bodies spend huge sums of public money but escape the rigour of the CAG's audit scrutiny. For example, the Legal Aid Board spends some £1.2 billion of public money each year. The decision to replace it with a legal services commission presented an opportunity to address the point but the current proposals do not. I am writing to the Minister to ask that this be reconsidered and the accountability arrangements for legal aid brought in line with those for other areas of public expenditure.

Mr. Geoffrey Clifton-Brown: Does my right hon. Friend agree that it is not only illogical and confusing that the National Audit Office does not have access to non-departmental Government bodies but dangerous, because fraud could be taking place? There is a gap between the Audit Commission and the National Audit Office in which there is no rigorous auditing. The NAO should be given access to such bodies.

Mr. Davis: My hon. Friend is right. It is a question not only of fraud, but of waste. All parties have been concerned about the sheer cost of legal aid over the years. Information that would have returned to Parliament from value-for-money studies arising out of the Comptroller and Auditor General's access would have provided a valuable common foundation for the sorts of reforms for which all parties are on side.

Mr. Alan Williams: As I do not want to sneeze my way through a speech, I will not be able to make a speech today so may I emphasise to the Minister that the point that has just been raised by the Chairman is not only a personal point or a point made by only one side of the Committee, but a House of Commons point? The Committee feels that very strongly and we hope that the Minister will respond to the point.

Mr. Davis: I thank—I almost said my right hon. Friend, but 1 do not want to do him that much damage—the right hon. Gentleman for that important intervention. I am sorry that he is not able to speak today. His contribution to the Committee has been one of the most valuable and one on which I have rested throughout the year.
The point made by my hon. Friend the Member for Cotswold (Mr. Clifton-Brown) is illustrated even better by the example of the Housing Corporation and the


housing associations. The Housing Corporation spends some f1.1 billion per annum, but the Comptroller and Auditor General and, therefore, Parliament has no right of access to the records of housing associations. There are 2,600 such bodies in the United Kingdom, and they receive £1.2 billion of public money. Their assets—the houses that they rent out—were largely provided by public finance. However, the Comptroller and Auditor General has to negotiate every time that he wants access to a housing association.
Our predecessor Committee in 1994 noted significant weaknesses in the Housing Corporation's control of housing associations. I regret to say—this relates to the point made by my hon. Friend the Member for Cotswold—that weaknesses of long standing in one association's procedures have come to light involving alleged corruption and fraud. I cannot say any more because the case may come to court. It is clearly time for Parliament to have a right to information from housing associations. The way to ensure that it does is for the Comptroller and Auditor General to have a right of access.
I also have concerns about the adequacy of the scrutiny arrangements in matters that arise from the constitutional changes as a result of devolution. In total, some £20 billion has been paid in grants to Scotland and Northern Ireland from taxes raised by this Parliament for which this Parliament is accountable to taxpayers. We should recognise that devolution will reduce Parliament's ability to call to account those responsible for spending taxpayers' money in Scotland and Northern Ireland. I am pleased that the Government accepted my call for independent audit arrangements in the Northern Irish and Scottish devolution Bills, but a very real accountability gap has been built into the new arrangements.
Three reports from the year illustrate my point. Our work on cataract surgery in Scotland, the privatisation of Belfast international airport and the administration of disability living allowance in Northern Ireland would not have been possible under the new arrangements. Those who disagree will argue rightly that the local PACs—which, incidentally were set up at our request by the Government—will deal with such issues, but in each case a large part of United Kingdom taxpayers' money and subvention will go to Northern Ireland and Scotland.
I reiterate the point made last year by my hon. Friend the Member for Bexhill and Battle and since echoed by my predecessor as Chairman of the PAC, the right hon. Member for Ashton-under-Lyne (Mr. Sheldon), that it is unacceptable that the Comptroller and Auditor General's rights of access are less extensive than the powers of the European Court of Auditors in respect of the final recipients of EU grants. Without such access, the Comptroller and Auditor General's ability to report to Parliament for EU spending in the United Kingdom is seriously impaired. On today of all days, we should take that issue seriously. I shall deal with the issue of the European Union later.
The next theme running through our work this year has been the need to combat fraud. Central Government spend more than £300 a week on behalf of every family in the country. It is our duty to those families that we ensure that their money is spent properly in their interests, and that we minimise the risk that taxpayers' hard-earned money is stolen, defrauded or misappropriated within government. Our interest ranges from the systematic defrauding of large social security budgets to the

misappropriation of relatively small sums by individuals at overseas embassies that I mentioned earlier. The magnitude might differ, but the principle remains the same.
In our 27th report, the Committee considered the measures introduced by the Department of Social Security to combat housing benefit fraud. We found it totally unacceptable that housing benefit fraud exceeded £900 million a year—about 8 per cent. of the total spending on that benefit. Our report emphasised the need for the benefit system to strike a balance between the addressing of needs fairly, and simple and secure administration. We were concerned about the impact of the interaction between benefits in creating opportunities for fraud. The failure of the Department of Social Security and the benefits agencies to control properly claims for other benefits, such as income support and jobseeker's allowance, creates a gateway to fraud in housing benefit. The Committee stressed the need to design fraud out of the benefit system—that is very important for the Treasury in planning for future years.
I am pleased that the Government appear to be taking fraud seriously and welcome their commitment to examine the funding arrangements that best suit a robust counter-fraud strategy. It is too early for us to judge the effectiveness of that strategy; it clearly did not reduce the level of fraud, as was shown by the accounts published during the past few weeks. However, as the strategy bites, we hope to reconsider that matter.
In our report on the irregular payments at the British embassy in Amman that I mentioned earlier—and in the interests of time, I will shorten my remarks now—the Committee focused mainly on the importance of ensuring that financial control systems work and, most important, that the people who abuse them are punished appropriately. The report emphasised the need to regard sound financial management as an essential feature of any successful organisation, and that it should not be seen as a second order activity—a point made by my hon. Friend the Member for Bexhill and Battle in Committee. We were not satisfied with the disciplinary measures taken against those who should have prevented the fraud—a point made by another hon. Member—and negligence in fiduciary duties should be regarded as a very serious offence.
Finally, I turn to irregularity on a grand scale in the European Union—a matter on which I have already taken two interventions. Our 35th report pointed out the serious institutional difficulties that arise when proper controls are not in place. The Committee expressed serious concern that, for the third successive year at that point, the Court of Auditors could not provide a positive statement of assurance on the legality and regularity of European Community payments because of the large number of errors that had been identified. Those errors cost about £3.5 billion.
All that took place before the current debacle, which is coming, or will have come, to a head today in the vote in the European Parliament. I will not comment on the vote itself, but hon. Members might find it valuable if I give a brief history of the issue, which might help them to put the current arguments in context.
As long ago as 1990, there were allegations of fraud in the European Community's tourism unit. In 1995, there were allegations of irregularities in the Commission's


management of assistance to Mediterranean countries. In March 1998, the European Parliament postponed its decision to discharge the Commission from responsibility for the 1996 budget, citing the urgent need to improve accountability in the fight against fraud. In July 1998, the European Court of Auditors published a highly critical report on the effectiveness of the Commission's task force for co-ordination of fraud prevention—the so-called UCLAF. At that time, I called for major improvements in the approach taken to tackling fraud within the Commission, as the extant arrangements clearly were not working.
In autumn 1998, there were allegations of irregularities and fraud in the European Community's humanitarian aid office and the European Parliament called for an independent European anti-fraud office to be established, similar to that which I had suggested in July 1998. Around that time, Jacques Santer accepted the need for such an office—but it also seemed to be accepted that it would take 18 months to two years to put in place. In December 1998, Parliament again postponed its discharge decision about the 1996 Budget, citing that the Commission had failed to satisfy it about improvements in combating fraud and corruption. We now know about the revelations of the European Union official that have caused the current crisis.
Irrespective of the outcome of the parliamentary vote, if the European Union does not come to grips with the fraud within its ranks, the citizens of the Union will lose faith and trust in the EU's ability to spend taxpayers' money. That would be a very damaging outcome. I believe that the simplest way for the European Union to get a grip on the fraud problem that it clearly faces is by instituting the anti-fraud office—which I called for last July—not in two years, but immediately. I know that it cannot be set up tomorrow, but it should be established within a few months—as near to immediately as possible.
The third theme running through our work this year was privatisation. There is not necessarily a consensus of view on the Committee about the policy of privatisation. I believe that it has proved extremely successful and that former public services have thrived under the privatisation policy. I note also that some £12 billion in assets are earmarked for release to the private sector under this Government. However, the Committee is interested not in privatisation policy, but in the effectiveness of its delivery, and that has been our focus this year.
Our 61st report brought together the cumulative lessons learnt from 35 studies of asset sales undertaken by the Committee and its predecessors. Over the past 20 years, more than 150 state-owned businesses have been privatised, raising some £90 billion for the taxpayer at current prices. The general lessons upon which we reported included the need for proper valuations to be conducted before the sale—that would seem to be fairly straightforward—the need for clawback arrangements to be included when a high degree of uncertainty surrounds the sale, and the advisability of selling shares in stages in order to deal with the ferocious difficulty of establishing fair market valuations before the capacity to thrive in the private sector has been demonstrated.
I could cite several such cases from this year, which I am sure that other hon. Members will also wish to highlight. Therefore, in the interests of brevity, I shall

leave them to one side. However, as the case is important to Northern Ireland, I shall pick up consideration of the sale of Belfast international airport, which provided a stark example of some of the problems. In our report, we drew attention to the need to follow proper privatisation procedures and to achieve transparency in the conduct of a sale. That is vital if public and market confidence are to be maintained when public assets are being sold. We were concerned that the Department had not investigated more thoroughly why the successful bid from the management buy-out team had dropped by more than £6 million to within £900,000 of the next highest bid. That struck us as being a singularly suspicious outcome.
Our work has raised a major privatisation strategy issue regarding the need for the taxpayer to receive a fair price based not just on the performance of the industry in the public sector, but on the prospective performance of the industry in the private sector. The true value of a business cannot crystallise until it operates in the private sector. That consideration is not confined to the public sector. It has been noted on several occasions that, in the case of management buy-outs, spin-offs from major companies can enjoy phenomenal increases in profitability when management is allowed—and, indeed, motivated—to exercise its initiative in running the company.
Many major companies have underestimated the value that can accrue from privatised parts of their concerns. Therefore, I suppose that it is no surprise that Governments make the same mistake. Nevertheless, it highlights the need for an improved privatisation strategy. Clawback provisions in the case of a private sale and the need to sell shares in stages in order to achieve the best price once the true value of a company is known are simple but effective measures that provide an improved strategy.
In addition to seeking to secure economic and efficient public services, we spent a substantial proportion of our time investigating issues of effectiveness, which has been the fourth theme of the year. Effectiveness is the quality of service that taxpayers receive. Our work in that area has covered the timely and effective delivery of services, the regulation of service providers and management and control processes. Again, our interest is broad, ranging from large public services such as social security to small-scale spending on vital public services such as cataract surgery in Scotland. Where public services fail, we have sought improved delivery.
In considering the starkest example, the Child Support Agency, we picked up on the work of our predecessors, who had significant concerns about the operation of the system, in particular the level of inaccuracy in assessment. We reviewed progress and concluded that unless firm action was taken, the Child Support Agency would continue to bring unnecessary hardship and suffering to thousands. We urge the Department of Social Security and the agency to look long and hard at the complexity that is built into the system and at ways of clearing away the errors and irrecoverable debt of the past. It is unacceptable that the agency's current accuracy target of 85 per cent. means that one in six cases—almost 80,000 cases in 1997–98—are wrong if the agency hits its target.
Our report on cataract surgery in Scotland was different. We examined the performance of the national health service in Scotland in increasing the proportion of cataract operations carried out as day cases and ensuring equality of access to cataract surgery across Scotland.


The National Audit Office report considered day care surgery in the round and found that its use increased the number of operations possible and reduced costs.
Although cataract surgery in Scotland requires a relatively small budget of £14 million, it is one of the most effective operations carried out in the national health service. It gives back sight to many elderly people and improves their quality of life. We were therefore dismayed by the slow progress in raising levels of day surgery for cataracts and by the wide variation in the level of day surgery across the trusts. It is shocking that many patients are effectively blind by the time they are referred for cataract surgery. The report is a good example of work that is based on one part of the United Kingdom but which has resonance throughout. I very much hope that the audit arrangements after devolution will explicitly allow for the sharing of good practice because that is a vital consideration.
My final theme, as my colleagues will be glad to hear, arises from changes that are afoot in the way in which Government policy is delivered to the public.

Mr. Charles Wardle: One minute, Chairman.

Mr. Davis: The Minister sees the discipline that is exercised in our Committee being applied to the Chairman, for a change.
The Prime Minister announced only recently the development of public service agreements to focus on outcomes, examining the implementation of policy in the round. He rightly pointed out that the public care little about who delivers a service—whether it is delivered by local or national Government—and they do not care at all about interdepartmental wrangles that might occur. They care about the effective delivery of service. The Prime Minister calls that joined-up government. I prefer to call it performance-driven government, because that is what matters.
Performance measurement has the potential to be the great governmental reform of this era. It is not a party political issue. Several Governments around the world, most famously in New Zealand, have undertaken initiatives on performance measurement. It has been a major component of speeches made by the leader of the Liberal Democrats. It was started in this country some years ago by the previous Administration in the "Competing for Quality" White Paper and other initiatives. It will continue under this Government with the introduction of resource accounting, public service agreements and specific initiatives in health and education.
There is wide acceptance of the value of performance measurement, but there are dangers, too. Public performance measurement will be effective only if the information that it delivers is of iron-clad integrity and is seen as such by the public and the public sector managers whose successes and failures are judged by it. The temptation to bias performance measurement for party political interest will be enormous, but must be resisted if the reform is to achieve its potential. The introduction of resource 'accounting illustrates the point.
Resource accounting is the most important development in public accounting for almost a century and a half. It will introduce commercial-style accrual

accounting for central Government Departments and, most important, it will include analysis of expenditures by aims and objectives, relating them to outputs where possible. It is due to take effect this year and will impact directly on the measurement of performance. Our 67th report on resource accounting and resource-based supply explored in some detail the implications of this.
In our view, if we are to have good, clear accounts for the public sector, we also need a similar system of good, clear performance information to go with it, but Departments must identify the right measures and targets for their performance—measures that will properly serve the needs of the Departments, the Treasury, Parliament and, of course, fundamentally, the public.
The political will seems to be there. There is scope for greater focus on performance in Government policy with more tangible accountabilities. Information technology has developed to provide a new, powerful tool for collecting and evaluating information which can be used to make these accountabilities real and catalyse significant improvements in performance. However, if we are to believe in this, we must ensure that the information we receive is seen and accepted by all as proper performance information, not political propaganda in any sense. This requires independent validation of performance measures. The proper way forward would be for the Comptroller and Auditor General and his staff at the National Audit Office to do this and to report to Parliament regularly.
The National Audit Office is developing an appropriate validation methodology for setting, compiling and presenting the output and performance analysis. The Public Accounts Committee should be looking forward to regular reports from the Comptroller and Auditor General on the validation of performance measures, but we are disappointed that the Treasury has not yet committed to independent validation. At present, validation will be left with the appropriate Minister, and I am afraid that the public will view that with the same scepticism that they might view a school report written in the child's own handwriting.
Parliament should have an input into the debate on performance measures that will be adopted and should have independent confirmation that the targets set are being achieved. The importance of this cannot be overstated. It will affect the service that constituents get for the money they pay. It will be the way of the future for holding the Government to account, and Parliament's rights and responsibilities should be clear from the outset. Done badly, it will corrode the citizen's faith in government; done well, it will materially improve government, and continue to do so far into the future.
Gladstone, the founder of our Committee, once said that it was the duty of government to make it difficult for people to do wrong, and easy for people to do right. Properly executed, properly audited performance measures will make it difficult for the Government to do wrong and easy for them to do right.
I urge the Minister to consider carefully and to accept that all Government performance measures should be subject to independent audit by the Comptroller and Auditor General of this Parliament. It is a crucial part of Parliament's duty to scrutinise the actions of the Executive and to hold the Executive to account. Accordingly, in measuring the delivery of public services


to all our constituents, it should be Parliament, through its instrument—the National Audit Office—which should be the final arbiter of what is a true and fair measure.

Orders of the Day — ROYAL ASSENT

Mr. Deputy Speaker (Mr. Michael J. Martin): I have to notify the House, in accordance with the Royal Assent Act 1967, that the Queen has signified Her Royal Assent to the following Act:
European Parliamentary Elections Act 1999.

Mr. Charles Kennedy: On that happy note—from our point of view, and from that of those who share common interest with us in these matters—I am grateful for the opportunity to contribute to this debate, at not too great length, I hope, and to follow the distinguished Chairman of the Public Accounts Committee whom I congratulate on his speech. More important, I congratulate the right hon. Gentleman, his colleagues, the civil service and all the other staff on the excellent and—as is evident to anyone who has been to the Vote Office to collect the papers—the voluminous outpourings of the Public Accounts Committee.
The motion stands also in the name of my right hon. Friend the Member for Caithness, Sutherland and Easter Ross (Mr. Maclennan), who is a long-serving and senior member of the PAC. On his behalf, I convey his apologies for not being present. Owing to arrangements made before the recess and before the change in the timing of our sittings, it is impossible for him to be present for the debate.
I shall address only the 42nd report, which deals with the Skye bridge in my constituency, and the Treasury memorandum in reply. I thank the Chairman of the Public Accounts Committee, who in the course of his duties has been courteous and concerned to deal directly with my constituents. They have, over many years, raised persistent financial, political and legal concerns about the entire contract.
The protesters welcomed—as I do—the PAC report and its scathing appraisal of the Government of the day and the sad and sorry background to the contract and to the difficulties that have resulted. Although the present Government inherited this mess—it was not of their making—at the end of my remarks I shall put one or two thoughts to the Minister, which I hope she will take on board. If she cannot reply today, perhaps she will explain after the debate what the Government see as the way forward.
The history of the contract goes back a long way. It covers the stewardships of Malcolm Rifkind, Ian Lang and Michael Forsyth as successive Secretaries of State, as well as that of the present incumbent of that office. The Public Accounts Committee rightly inquired into the background. The most telling conclusion of its generally damning report was that the terms on which the bridge was provided, including the real rate of return to equity investors in the project of 18.4 per cent. a year, were not "determined competitively." In a casino, 18.4 per cent. is a pretty good rate of return if it has not been determined competitively.
The Committee felt that it was not possible to be satisfied that the costs of the bridge were reasonable. It questioned whether value for money has been secured for the taxpayers as well as the toll payers who have to foot the bill. Anyone who has visited that part of the United Kingdom will know that it is a short crossing from the mainland at Kyle of Lochalsh to the south end of the Isle of Skye. The single toll fare for an average car with only the driver in it is in excess of £5. An astronomical burden is being placed on a fragile community whose members have low incomes compared with the national average. The bridge is an important gateway to the western isles of Scotland, which have an even more fragile economy. The charges applied to commercial vehicles are quite astronomical. That is the background to this vexed issue.
The Treasury minute was produced by the Scottish Office Development Department—which in this context sounds like a contradiction in terms. I do not believe in shooting the messenger, but I am concerned that the civil servants who advised Ian Lang, Malcolm Rifkind and Michael Forsyth are, in large measure, the same civil servants who are now advising the present Secretary of State. I am not surprised that many of them are not exactly volunteering to come forward with their hands up and admit that they made a complete and utter dog's breakfast of negotiating the contract—at such an advantageous rate to the developer and such a disadvantageous rate to my constituents and the users of the bridge.
The minute that the Scottish Office Development Department produced in response to the PAC report can at best be described as casual in the extreme. It says:
The Department notes the Committee's comments. Given the low level of traffic, high dependency on tourist traffic and the novelty of the project"—
note that word "novelty"—
the Department could not have reasonably expected to secure guarantees. Provision had to be made in the contract to cover the possibility of a longer toll period, and tolls which might have exceeded the original target, although the Department was confident at the time of the negotiations that these eventualities would not arise.
That is very reassuring. What the minute is saying in civil service speak is that the Department was making it up as it went along. This project was the forerunner of the private finance initiative programme for the United Kingdom as a whole. It is no wonder that we have ended up with the political and economic fiasco that has been the subject of so much of my in-tray for the past five years.
Not only is the question whether the taxpayer has been well served worthy of debate, but we have reason to question the National Audit Office figures on which the PAC report was based. Those figures were based on the developer's financial project model for the contract, yet the financial model differs substantially from the figures in the accounts of Skye Bridge Ltd.
The financial model shows the developer's input for 1991 as £12.3 million, whereas the audited accounts show the developer's contribution for 1991 as £0.6 million. In 1991–96, the financial model, which the NAO accepted, shows the developer's costs as £27.3 million, whereas the audited accounts show the costs for the same period as only £19.3 million. If the model overplays the developer's contribution, equally, it underplays the cost to the taxpayer. The model shows the taxpayers' contribution for 1991–96 as £10.6 million, whereas the actual contribution revealed in the accounts is £11.6 million.
It is not our function to question the accuracy of the NAO's figures. My argument is not with the NAO, but the fact that it has had to accept figures provided by the developer and has not apparently had access to or checked the audited accounts is cause for serious concern. The developer's version of the figures seems to have been seriously inaccurate. It is hardly surprising that all the apparent errors worked in the developer's favour.
The NAO, not surprisingly, is as confused as everyone else by the fog surrounding the funding of the Skye bridge contract. For example, figure 10 on page 45 of the audit report gives the construction costs as £20 million, whereas figure 13 on page 49 of the self-same report gives them as £27.3 million. This issue is riddled with difficulties, complexities, contradictions and confusions, so it is no wonder that the contract has led to the problems that are before the Scottish courts.
For years, I have pursued this issue with four Secretaries of State in the House, in the Scottish Grand Committee and in Adjournment debates. There is a serious case for the Treasury taking the matter by the scruff of the neck before Scottish devolution and before it becomes the remit of the Scottish Parliament, and conducting a properly independent examination of the entire financial background to the Skye bridge contract. The cost to the public purse is a damn disgrace, and this major scandal must be investigated.
I am not satisfied that I am consistently receiving information or the relevant answers to my questions from the institution of the Scottish Office—I am not referring to the Secretary of State personally. Moreover, the Treasury should have a searching look into the effect on the public purse before responsibility for the matter is passed to Edinburgh following devolution.
Skye Bridge Ltd—which is essentially the Bank of America—and its agents are allowed to recover £23.64 million in tolls over the lifetime of the contract. That is not as simple as it would seem—nothing is simple in this world. The toll revenue is counted in constant 1991 prices, discounted at 6 per cent. a year to a 1991 base year. That acts as a sort of negative form of compound interest. In year one—1991—£1,000 in tolls would count as £1,000 off the debt. If it is discounted by 6 per cent. each year, by year 10, the compounding effect would mean that £1,000 in tolls to count as only £573 off the accumulated debt. Therefore, a great deal more than £23.64 million in real terms would need to be taken to clear the debt, which is hanging like an albatross around the community's neck.
It gets worse. The cost of collecting the tolls is running at £750,000 per year. In other words, about £1.40 of the cost of each crossing is used to service the cost of collecting the toll. On present prices, over a 25-year period, that comes to the unbelievable figure of £18.75 million. As I have said, that is just to collect the tolls, not the value of them.
Why does it cost so much? Surely, that figure knocks a huge hole in any repayment of the notional figure of £23.64 million. Can one assume, therefore, that £23.64 million is a net figure after operating costs have been taken into account?
Taking into account both those points, the Minister should ask the Treasury to estimate what will be collected in tolls before the net figure of £23.64 million, counted in constant 1991 terms and discounted at 6 per cent. a year, is cleared. Will it be £60 million or £70 million? We have never been given an accurate figure.
The toll takings should be made public. A few months ago the national Mod, the highlands and islands equivalent of the Eisteddfod in Wales, took place on the Isle of Skye. It is a huge cultural celebration and a major event in the Scottish calendar. As one would expect, there was a huge influx of people for that week. Out of interest, I wrote to the toll company to find out how much more was taken in tolls given the vast influx of people for that event at the end of the summer season. I received a courteous reply saying that the company does not reveal its figures. As the local Member of Parliament I am not allowed to know how much the company made out of that major national event. That is a disgrace. A few days ago, we were debating freedom of information. I look forward to that legislation because private companies such as the toll company, which have signed a deal with the Government of the day at a cost to the public purse, should not be immune from having to declare their profits and takings in the same way as any other company in a public position.
My constituents and the House have a right to know how much has been collected from the public purse and how much has been paid to the private developer. Currently, we only have estimates of how much is being taken in. We have every right to know.
The House will be pleased to know that I have now reached my final point. It concerns matters that are currently before the Court of Session in Scotland. I know that the Clerk to the Public Accounts Committee is concerned that we should not breach the sub judice rule. I can assure you, Mr. Deputy Speaker, and the Chairman of the PAC that I have no intention of doing that.
There is a case before the Court of Session now. It was heard on December 10 and 11. It involves one of my constituents questioning the legality of the toll regime. We are awaiting the final written judgment from the court, which is expected sooner rather than later. It is an interdict that has been brought in a Scottish court and, under Scots law, the sub judice provisions do not apply as it is not a criminal case and it has already been aired publicly in court. The only basis for applying the sub judice rule would be the basis of prejudice against the respondent, my constituent. I can place on record the fact that he has waived any right to such privilege and he is happy for me to discuss one or two aspects of the case.
There has been a civil disobedience campaign associated with the toll regime. My constituents have been subject to criminal prosecution on the basis of a toll order that was never published and an assignation statement that only ever appeared with a draft order and was completely inaccurate by the time the actual order was made. That cannot be right. The Secretary of State gave his written approval. The then Secretary of State wrote to me in December 1997:
The assignation of rights to charge and collect tolls is contained in the Concession Agreement between the Secretary of State and Skye Bridge Tolls Limited, the concessionaire. The Secretary of State was aware of and agreed to the appointment of Miller … Joint Venture to collect tolls as part of the management and operation of the bridge.
The tolls are collected by Miller Civil Engineering. That company—I have tabled written questions about this—is apparently registered as dormant at Companies house. It collects the tolls on behalf of MDJV, of which there is apparently no record at Companies house, on behalf of Skye Bridge Tolls Ltd, which is wholly owned


by the Bank of America. Clause 23 of the concession agreement states that there will be no change in the financial arrangements without the written consent of the Secretary of State. No written consent has ever been produced in public at any of the legal hearings that have been taking place in Edinburgh. One can only assume that it does not exist.
I shall now come to the nub of this sorry saga—which represents a ludicrous affront to public finance—to which the Public Accounts Committee draws attention in its report. Huge sums of public money went into the Skye bridge project. My constituents and others are now being forced to pay massive tolls against their wishes. In such circumstances, surely the public and Parliament have a right to know the truth about such vital matters as ownership. The previous Government placed out-of-date documents in the official records of Parliament without any amendment to show the change in ownership details. As a result, I believe that that Administration was guilty of downright deception.
The Scottish Office is continuing to maintain that everything is wholly above board, proper and correct, despite the change in ownership which was never properly notified, the fact that the document was never made available and the fact that the tolls are being collected by a company different from that specified by the Secretary of State at the time. That strikes me as entirely implausible.
As I have said, further complications are now coming to light over the legal trading status of Miller Civil Engineering and MDJV. As I have said, Miller Civil Engineering is registered as a dormant company and there is a further suggestion—I have raised this in another written question—that MDJV is not even registered for value added tax. It has been confirmed to me by the Department of Trade and Industry that Miller Civil Engineering Ltd did not trade on its own account—those are the words of the DTI—during the last financial year, but it seems able to operate the collection of tolls on the Skye bridge.
There are too many unanswered questions in this quagmire. I am grateful to the Chairman and the Committee for exposing the affair and for bringing the luminosity of truth to bear on some of the shortcomings behind it. However, I remain convinced—I commend this suggestion to the Minister—that, prior to this issue falling within the jurisdiction of the Scottish Parliament at Holyrood, we need the Treasury to instigate a complete and thorough overhaul and independent investigation of this entire sorry and shabby tale.

Maria Eagle: I am grateful for an opportunity to speak in this debate. I congratulate the right hon. Member for Haltemprice and Howden (Mr. Davis), who has been the Chairman of the Public Accounts Committee for nearly two years, although it probably feels more like 10. When I spoke in this debate last year, I welcomed him to his job and wished him a long and distinguished tenure. I should like to reiterate that. The right hon. Gentleman's predecessor, my right hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon), had an extremely long tenure and he remains one of those

Members who is most respected on issues of public accounts, public spending and holding the Executive to account. If the current incumbent continues in his current vigorous form, I hope that in due course, perhaps after 14 years, he will also be as well respected as my right hon. Friend the Member for Ashton-under-Lyne.
I do not wish to insult the right hon. Member for Haltemprice and Howden gratuitously. I also recognise and welcome the vigour that he has shown in all debates in the House on public accounts. He has also been very active in the devolution debate. In his speech today, he made some valid and thoughtful points on the future of the Public Accounts Committee and on the way in which the National Audit Office and the Comptroller and Auditor General will be able to operate in an environment in which public sector and Government institutional and auditing arrangements change fast. Who would dare to say that the Public Accounts Committee is backward-looking or retrospective in all its activities? The right hon. Member has clearly shown that it is not.
I add my voice to that of the right hon. Member for Haltemprice and Howden in congratulating the Comptroller and Auditor General and his staff at the National Audit Office on their year-round work. Without their efforts and dedication, the Committee could not be anywhere near as effective as it has generally been recognised to be. Undoubtedly, our ability to scrutinise the Executive and to examine public spending would be almost completely destroyed were we not able to count on their efforts.
Over the next few years, the CAG and his staff face a massive increase in their work load. However, there are some concerns about diminished access because of changes in constitutional arrangements, the advent of resource accounting and the necessity of meeting other auditing bodies and new public accounts committees to try to keep a grip on public sector auditing. All those changes will massively increase their work load. I wish them well in coping with it. I hope that they will receive the resources that are necessary to continue contributing towards achieving the public sector savings that can be made using their auditing expertise.
I finish my preliminary thanks by saying that the Committee would be much less effective than it is were it not for its Clerk and his staff. I thank them and congratulate them on the work that they did for us in the previous Session.
I support the Chairman's comments on increasing access to information on public money. I know of no reason why Parliament, the National Audit Office and its auditor, the Comptroller and Auditor General, should not be able to follow public money raised by Parliament regardless of where it is spent. Achieving such tracking would be Committee members' nirvana and is our desired end result. I realise that practical considerations and changing institutional arrangements mean that achieving that goal is not possible, but it is our aspiration. I should welcome any suggestions on increasing access. I believe that the Government have been particularly open to such suggestions.
There is nothing like transparency—or a Public Accounts Committee—to make people wonder whether their spending arrangements and spending supervision are in order. I should therefore welcome any further action taken by the Government to increase access. The


Chairman mentioned the Legal Aid Board and the Housing Corporation. There is no reason why such organisations should not be audited by the Comptroller and Auditor General.
I am happy to be participating in my second annual public accounts debate. Earlier today, while considering what to say in the debate, I wondered why our Committee has an annual debate, as not all Select Committees have that privilege. I suppose that our annual debate demonstrates the Committee's seniority and prestige in the House. It demonstrates also the historical importance of Parliament's role of scrutinising public spending and supply. Our annual debate also gives hon. Members, such as the hon. Member for Ross, Skye and Inverness, West (Mr. Kennedy), an opportunity to make very detailed, prescient comments on matters such as the Skye bridge. It allows us to examine a specific matter closely, which the House is usually unable to do. That is the value of our annual debate, which I hope will continue.
Our annual debate also reflects the prestige of the Committee and of its work. One role of all Back Benchers, regardless of which party they belong to at a particular time, includes asking questions about how well we hold the Executive to account. When I say "the Executive", I do not mean only Ministers. I realise that many of our constituents think of the Executive as the Government and think of Cabinet Ministers, but one should not—especially when one is a member of the PAC—think of the Government in that way. The Committee deals not with Ministers but with accounting officers; we deal with Whitehall, not Downing street. When I think of the Executive, I tend to picture the "permanent" Executive rather than the "transient" Executive, which is the Government—although our current Government will be less transient than most.
We should consider the effect that the PAC can have on Whitehall. Committee members realise that the civil service and Whitehall accounting officers often feel nervous about appearing before the PAC, as we have often been told that they have such feelings. People are often concerned about having to appear at an evidence-taking session. We often receive feedback saying that we have perhaps been tough on Mr. X or Miss Y, who thought that we were a bit unfair. However, Committee members sometimes have to ask themselves a few uncomfortable questions. How well does the Committee perform? How well do we manage to promote the role of all hon. Members in scrutinising public spending? Are we doing well enough? Are there ways in which we can improve our performance?
The CAG and the PAC are very good at dealing with specific issues, such as fraud and propriety in spending—which are the Committee's bread-and-butter tasks. The Chairman mentioned the report on the Amman embassy scandal. It was scandalous that an official wrongly gave the PAC the assurances that we were given. However, the case demonstrated the fact that Whitehall generally resists dealing with the findings in the PAC's reports. I think that such inaction is not a vast conspiracy to ignore Parliament, but arises from Whitehall's culture of the permanent Executive, as opposed to the transient culture of politicians and Governments.
Whitehall accepts the vast majority of the PAC's recommendations. Therefore, why do some Committee members—I am certainly one of them—think that

Whitehall does not always act on our recommendations? The Amman embassy report provides one example of inaction. I should like briefly to consider why that might be. However, I should first apologise to the Ministry of Defence, because I shall be using it as an example.
As I said, there is a culture of permanence in the civil service. Those who staff its senior ranks generally depend for career advancement not on Ministers, who come and go, but on one another, on the Whitehall network and on conventions on seniority. I should not say it depends on Buggins's turn, although I just did. One gets the feeling that senior civil servants' advancement does not depend on Ministers, which is perhaps a good thing and is often regarded as a strength. It is good that civil servants, including senior civil servants, and advisers can give their advice without fear or favour, but it can also be a weakness.
Civil servants must deal with a different culture and think about a different hierarchy. They have a different way of ensuring that they get on in life, which means that they do not always listen to Ministers or act quickly on the instructions of Ministers, who come and go. Whitehall sticks together and resists attacks from outside. The more senior staff become, the more they depend on one another for advancement.
The right hon. Member for Haltemprice and Howden mentioned the Committee's report this Session on a major Ministry of Defence project. Although I realise that the report is not part of today's motion, it revealed—not for the first time in defence procurement—a startling picture of chronic overspending, very poor control of contracts and lengthening delays in bringing contracts to fruition. It is not a new problem, which has been outlined also in previous reports on major projects. The Ministry of Defence is a chronic overspender and shows chronic poor management. The reports that we have had from it during my time on the Committee suggest that it resists criticism from the PAC. It never seems to improve. Our 51st report, on the MOD appropriation accounts, showed poor day-to-day management.
It should be a matter of shame to have to come before the PAC when accounts have been qualified. That should be avoided at all costs by any self-respecting accounting officer, but the MOD regularly comes before the Committee. It has overspent its appropriation accounts in five of the past 10 years. When there are excess votes, they are from the MOD more often than not. It sometimes even overspends its excess votes.
The 51st report highlighted many significant day-to-day issues, illustrating the fact that the Ministry seems not to have a grip on its spending. One increase in spending that should have required Treasury authority—the decontamination of an MOD site at Waltham Abbey—went ahead without the Ministry following the rules to secure that authority. Another reason for the accounts being qualified was that the MOD was unable to account for the day-to-day payment of its military personnel. Suspense accounts had to be closed because they could not be balanced, resulting in £40 million having to be written off. The new account established as a replacement was out of control within weeks and could not be balanced, leading to another write-off of £19.5 million. Almost every time the MOD comes before the Committee, we see its failure to control its spending.
When we question them, representatives of the Ministry do not like to admit that they have done anything wrong. They tend to resist questioning that suggests that they should be fairly humble and should look for a way to improve. The major projects report—which should not be mentioned in the debate, but I am the second person to refer to it—is illustrative. It quotes some of the criticisms that the PAC made 100 years ago. The complaints that have been made over the past few years are in the same vein. The Ministry believes that it is too important to have to worry too much about controlling its expenditure. It is dealing with the defence of the realm, after all. The Committee is not as effective as we would like. We can congratulate ourselves on being effective in some ways, but we have not managed to change the culture of the MOD and make the civil servants and accounting officers understand that appropriation accounts are not targets to be aimed at, but absolute limits to be kept. As I have tried to illustrate, the problems go wider than just appropriation accounts.
We produced a report on the sale of the married quarters dealing with the amazing phenomenon of a Ministry selling houses for vastly less than they were worth—£77 million to £136 million less than a cautious valuation. There was no competition and they were sold in a job lot to one outfit—Annington Homes, as I recall. They were not properly sold, because the Ministry managed to retain liability not only to repair the properties—imagine selling a house and still having to repair it—but to pay rent on the properties that were vacant but not declared surplus. Having sold the properties, the Ministry took long leases back on them. What is the point of doing that? Even in a big project in which a job lot of houses was sold, the Ministry showed itself unable to consider properly the matter of accounting for public money and ensuring that we get value for it.
I do not want just to be unpleasant to the Ministry of Defence. I want to move to another Department to consider whether Departments learn from their mistakes when faced with a value-for-money report from the NAO and scrutiny from the PAC. Is there an identifiable change in their subsequent behaviour? Do they listen to us, learn and make changes? To illustrate that, I shall consider the NHS executive and its information technology procurement.
I am sorry to hear that my right hon. Friend the Member for Swansea, West (Mr. Williams) cannot speak today. He made the analogy of standing up and walking into a brick wall and asked what would be thought if someone picked themselves up and did it again. Would the casual onlooker think that they were mad or drunk? The NHS executive did that three times on IT procurement with the Wessex health authority, then on the hospital information support systems and, perhaps most notorious of all, on the Read codes.
The report on that was particularly interesting. The issue is of great importance to the future of the NHS. The system will enable medical records and records of treatment to be put on computer—preferably on a common system throughout the NHS. One has only to outline that to realise what a vast undertaking it is and what a difficult job it might be. The codes are ways of classifying particular treatments, outcomes or other items

that should be in health records. They have to be common and everyone who might access the system has to understand it and be able to use it.
The Committee's 62nd report, on the purchase of the Read codes by the NHS executive and the management of the NHS centre for coding and classification which deals with them, is damning. Some £32 million has been spent so far on developing a system about which many of us who examined the evidence are dubious. I do not have confidence that Read version 3 will ever work. It has not yet been implemented. To our knowledge, it has been trialled in 12 NHS units. I have no evidence that version 3 has suddenly spread beyond that into general use. If that happened, it would cost many millions of pounds more to implement across the NHS.
The report is damning not just because of the £32 million that has been spent without any business case being made for the development of the codes. The money has been spent with no clear development plan or time scales. There was also a clear conflict of interest, because Dr. Read, who developed the codes, was paid to hand over the copyright and was then appointed to run the NHS outfit that would develop them, while his private company had sole rights to sell them. Dr. Read has been estimated to have made about £8 million so far, although I do not know how accurate that press report was.
The NHS executive had already suffered two seriously embarrassing reports from the Committee on IT procurement, but it got itself into a similar problem, if not a worse one, on the same issue. Since the publication of the report, the NHS executive has sought to justify its position, despite the clear worries in the NHS and among those who follow such issues in the computing world that Read codes will never work. Has the NHS executive taken that on board and learnt from the report? Do Departments ever accept that too much money has been spent on a system that will not work, and decide to bite the bullet and abandon it in favour of something else? So far, as far as we are aware, the NHS is continuing to develop the Read codes.

Mr. Alan Williams: Is that point not emphasised by the fact that, several times during the Committee's sitting, the NHS executive witness said that there had been no conflict of interest, whereas Dr. Read himself said that there had been a conflict of interest?

Maria Eagle: My right hon. Friend has a very good memory. He is right to say that there was a contradiction in the evidence. As the hon. Member for Ross, Skye and Inverness, West pointed out, Whitehall can sometimes produce obstructive responses to our reports. Although the people who took decisions and gave advice are defensive of their actions, and do not want to admit that they were wrong, if the Committee is to be effective and produce improvements, they sometimes have to do so. I hope that, next year, problems will be identified and people will say, "Mea culpa," promise to put things right and then do so. I do not blame Ministers of any party; it is the culture of Whitehall to say, "We are running this. We rather resent you looking too closely at it and, if you criticise us, we shall defend ourselves."
I hope that the Government will encourage Whitehall and its permanent staff to be less uptight and more objective and to make sure that the lessons that the PAC


and the National Audit Office can bring to the implementation of public policy and spending public money are well learned, so that we all benefit.

Mr. Richard Page: I took the precaution of looking at the Hansard reports of the last few annual debates on public accounts, including my own immortal words. I discovered that, almost every year, I started my speech by saying how disappointing it was that so few people had attended the debate. This year, I have to alter my start line because there are a few more of us. I hope that that trend continues, because it is a significant debate that sends an important message to the mandarins in Whitehall.
I start by welcoming the Minister to her new position. She has moved from small businesses to big businesses. I can tell her that the problems are the same; it is just the amount of money that is different, and it will be more dramatic if she gets things right—or indeed, if she gets them wrong.
Before dealing with the report, I thank my right hon. Friend the Member for Haltemprice and Howden (Mr. Davis), the Chairman of the PAC, for guiding our Committee through the previous year. He has a contrasting style to his predecessor, but all roads lead to Rome and I am glad to say that the Committee produced some hard-hitting and effective reports with unanimity. Ever since I have been on the Committee, 100 per cent. of the Committee has endorsed its reports. I was first on the Committee in 1987 and I believe that our unanimity gives us strength. United we stand and divided we fall. We must make sure that, whenever possible, our reports are 100 per cent. endorsed.
I also thank the PAC staff—led by Ken Brown—who have always provided an effective and efficient service, for which we are exceedingly grateful.
My few words will follow in the footsteps of my right hon. Friend the Chairman. Obviously, that is a wise and sensible thing to do. It also involves a degree of crawling in that I hope that I shall be called to speak in the Committee earlier rather than later, so that all my ideas and questions will not have been taken by others. However, I mildly disagree with the hon. Member for Liverpool, Garston (Maria Eagle) in that, although I wish my right hon. Friend the Member for Haltemprice and Howden every success, I would be quite happy if his tenure were for only three years, but time will tell.
Of course, the Committee would not be able to function without the work of the Comptroller and Auditor General, Sir John Bourn, and his highly professional staff in the National Audit Office. I have every respect for their skills and for the way in which they report their findings to the Committee. Their skill and expertise are recognised by many countries throughout the world, who call on the National Audit Office for help and advice.
The Committee needs to recognise that the reports that come before us are the product of a long process of investigation and the result of negotiations between the Department, public body or agency under scrutiny. Naturally, those bodies are not anxious to be severely criticised and usually argue, as I know from experience, for potentially damaging comments or statements to be reworded by what could be described as a process of plea bargaining. That sometimes makes the task of reading the

NAO reports rather like the old art of Kremlinology: one has to be able to read between the lines to find out where there have been disputes. I am not complaining about that. It is part of what makes being a member of the Public Accounts Committee a little more challenging and makes one work a little harder.
Today, I shall concentrate more on the way in which the PAC operates than on the reports themselves, as I believe that there is room for advancement. I promise the House that there has been no collusion between myself and my right hon. Friend the Chairman, except on one small aspect, which I shall raise at the end of my speech.
I am concerned about the questions and potential conflicts that are posed by the Government's rushed devolution measures. Already, many regard the establishment of a Scottish Parliament as a stepping stone to Scottish separation. It is important that national sentiment is not allowed to block access by the NAO and PAC to how the money has been employed. The hon. Member for Garston said that we should have the power to follow wherever the money goes, and I am greatly concerned that shutters will be brought down to stop us doing that.
I understand that, under the Barnett formula, there is considerable financial support for Scotland—above the average amount per head that applies in England. If those extra sums of money are allowed to continue, the NAO should be allowed to follow the financial trail. I should also emphasise that the skills and ability that have been built up by the NAO over the years should not lightly be put to one side in a misplaced enthusiasm to have everything under Scottish control.
My first main point regarding the operation of the Committee concerns the way in which reports are brought before the Committee. I believe that, when we consider a report, the accounting officer responsible for that report should be there to answer questions. How many times has the Committee found that, within seconds of a report hitting the desk, the accounting officer has either moved or retired to Chichester to tend his roses? I believe that all retired accounting officers go there and the new man sits in front of us and says with much sucking of teeth, "I agree with you. It is a deplorable situation. However, I am new to the job and that is what I will do to put it right." We, being a lot of softies, say, "It is not his fault, is it? We can't be hard on him." Therefore, we tend to be too kind and forgiving.
I believe that it should be the norm and the custom and not an exception to call former accounting officers back to be examined on their records in their Departments or agencies. There should be no hiding place or escape route if commitments given in the past to the Public Accounts Committee in good faith are not honoured. We are entitled to question those responsible for the implementation of those policies.
I wish to refer to my concerns regarding what I call the fire-and-forget principle on which the Committee operates. There are varying degrees of noise, lightning flashes and smoke when a National Audit Office report is published and is followed by the Public Accounts Committee inquiry. It is then usually followed by a period—perhaps years—of deafening silence. We have no idea of what is going on, or of whether the recommendations have been implemented. We have no idea whether they have been successful or not. All too


often the matters are revisited years later by the Committee, and we find that little has been done to alter the way in which the Department has been tackling those problems.
One of the advantages, or disadvantages, of serving on the Committee for some 10 years, as I have—I know that the right hon. Member for Swansea, West (Mr. Williams) has served even longer—is that one sees the same problems coming around time and time again. As an example, the House should consider the difficulties faced by the Child Support Agency in collecting maintenance payments from absent parents. The subject will be familiar to all right hon. and hon. Members, as we have all had surgeries full of people complaining about the way in which the CSA has operated.
Successive chief executives and accounting officers of the CSA explained to us how they would deal with the backlog of cases, incorrect assessments and appeals. The message consistently was that the problem was being solved. Unfortunately, as the PAC work in the early months of 1998 revealed, the situation has not significantly improved since the earlier days of the CSA work. Now, the Department of Social Security, the CSA and—more importantly—taxpayers are having to face writing off much of the uncollected arrears accumulated during the previous and present Parliaments. That is the penalty that we are paying for the insufficient attention that has been paid to the Committee's reports. We heard assurances during our last examination, but I have serious doubts that we shall find the situation improved at all in the future.
It is possible to cite several other examples. We looked several months ago at the problems that the same Department was facing over the transfer of data from the old computer system for national insurance contributions to the new one. There had been technical difficulties with that in earlier stages. Like other members of the Committee, I was sceptical about the likelihood of the target date for completion of the operation being met, as it was less than two months away. We were assured by the witness that the target would be met but, within weeks, it was announced that the completion date had had to be put back—at a cost of many millions of pounds.
It is not in the public interest for the PAC to be offered what I can describe only as a hopeful statement about solving a problem. It would be far better to tell us the facts and the odds that a solution will not be forthcoming. In turn, that would enable the Government and the Minister involved to do something about the problem.
The Committee took the unusual step in its last report—on the procurement of major Ministry of Defence projects—of producing a summary of previous reports, going back over decades, to show that the same mistakes were being made time and time again. It appears that the Ministry of Defence has been quite happy just to proceed as if the reports had no relevance. This time, we have been told that the smart procurement initiative will solve the problems of cost overruns and delays before major projects enter service. I hope I that am wrong, but I am cynical. I will not be holding my breath about this matter.

Mr. Clifton-Brown: I wonder whether I might put to my hon. Friend a suggestion that will cause ripples

throughout Whitehall. Does he think that an accounting officer who has been in charge of such a gross financial mismanagement ought to be subject to no further preferment?

Mr. Page: I would not want to fire such an Exocet until I was thoroughly satisfied that the situation was completely and utterly in the hands of that particular accounting officer. There may have been the beneficial and guiding hand of a Minister behind him which has prevented certain things from happening. Tempting as my hon. Friend's suggestion might be, I would want to make sure that we were targeting a genuine wrongdoer, rather than someone who has been put into a set of circumstances that may not be completely of his own doing.
There have been times when senior civil servants have admitted that mistakes have been made. The Committee had the classic example this year of a serious case in the British embassy in Amman. Having been reassured by the former permanent under-secretary of state at the Foreign Office that new, tighter proceedings would mean that such a thing could never happen again, within a short time we had a second example of embezzlement, which caused a great many red faces in the Department.
I shall draw my remarks to a close, although the wealth of material is such that one could filibuster about the PAC and its activities for hours on end. However, I wish to touch on the various references to the situation within the EU at the moment, the discussions about fraud and the problem, which is occupying the headlines, of the hundreds of millions of pounds that have been misappropriated. I find it most peculiar that the European Parliament can elect Commissioners one by one, but can sack them only en bloc. That seems to me to be a crazy situation. Surely the Parliament should be able to direct its fire on one or two particular Commissioners if they seem to be failing in their particular tasks.
The Committee Chairman mentioned the need for an EU anti-fraud squad, and I should be more than happy to endorse that. However, it does not go far enough, and more is needed. The European Court of Auditors signs off the accounts and points out if there has been a fraud, but it goes no further. It does not have a value-for-money aspect. Our National Audit Office, and our forms of government accounting, took a step forward in 1983 when we introduced value for money and the examination of the three criteria of economy, effectiveness and efficiency. Since then, we have seen how the Government can spend money in a more effective way, which benefits the taxpayer.
The one slight collusion between myself and my right hon. Friend the Member for Haltemprice and Howden is to ask whether we should recommend that we go over to Brussels and visit the European Court of Auditors to talk to people. That would do two things—first, we could give them some of the benefit of our experiences, and secondly, we could learn about some of their problems, which would help us, in turn, to see that we, as a nation, spend EU money more effectively.
I believe that the Committee has worked hard and diligently through the year, and I have no doubt that it will have plenty to do in the year to come.

Jane Griffiths: Thank you, Mr. Deputy Speaker, for allowing me to speak in this first debate on our new Thursdays. I join others in paying tribute to the Chairman of the Committee, the Clerk and all his staff, and pay particular tribute to the Chairman for the way in which he has guided and helped us all over the past year and more.
Yesterday, during a debate initiated by my hon. Friend the Member for Thurrock (Mr. Mackinlay) on Select Committee reform, requests were made for more time for debates on reports of Select Committees on the Floor of the House. A number of speakers emphasised the importance of such debates to scrutiny of the Executive. That makes me all the more pleased to speak in today's debate.
In my short speech, I shall concentrate on two reports: the 61st, "Getting Value for Money in Privatisations", and the 27th, "Measures to Combat Housing Benefit Fraud". My hon. Friend the Member for Liverpool, Garston (Maria Eagle), both here and in the Committee, has used the "banging your head against a wall" analogy, and that is certainly my experience as a member of the Committee. One learns that banging one's head against the wall hurts, and that not doing so does not hurt; the problem is getting others to understand that, and to stop banging their heads—and, inevitably, ours—against the wall.
That brings me to the 61st report, which identified a number of key lessons to be learnt in the selling of public assets. The Government welcomed that in a Treasury minute, and it is to be hoped that we and they learn from past experience when it comes to the sale of shares in the Commonwealth Development Corporation, National Air Traffic Services and Belfast port. Otherwise, the public will lose out.
Billions of pounds of public money were lost as a result of the failure to follow the PAC's recommendations in regard to selling shares in stages. That has already been mentioned today. In 1986 and 1987, the Department of Trade and Industry and the Department of Transport sold British Airways and the British Airports Authority. When the PAC reviewed the sale in 1987–88, it recommended that Departments should consider the phased sale by tranche that was used successfully in the sale of British Aerospace and Associated British Ports. As we have seen, the Government did not learn that lesson. In 1990, the DTI sold the regional electricity companies. Reviewing those sales in 1992–93, the Committee regretted that a phased sale had not been undertaken. I am not discussing the merits or otherwise of privatisation, because that is not the Committee's brief; I am talking about the effects of it.
It seemed that someone had learned that banging one's head against a wall hurts. In 1991, only 60 per cent. of PowerGen and National Power was sold by the DTI. In 1996–97, the report on the sale of the remaining 40 per cent., which had taken place in 1995, revealed that an additional £2.3 billion had been realised because not all the shares had been sold in 1991. Some lessons have been learnt; but a National Audit Office report published on 16 December last year, which the Committee has yet to consider, reveals that the sale of Railtrack in May 1996 would have raised an extra £600 million if 20 per cent. of the shares had been retained and sold later. We all know that the sale of Railtrack was governed by more than the concept of raising

money. It is likely that the taxpayer lost millions if not billions of pounds, because other factors were involved—but perhaps that is more head-banging.
How are Departments to be induced, encouraged or instructed to learn the lessons, and to implement the findings that the PAC worked so hard to obtain? The Treasury minute in response to the 61st report says:
The Treasury will ensure that the lessons set out in this report are drawn to the attention of all departments involved in sales and reflected in guidance for departments.
That is good, but how do we ensure that the guidance is followed? I suggest to my hon. Friend the Minister that, as well as guidance for Departments, there should be a checklist outlining the procedure that should be followed when a sale is made, and the issues that should be considered at each stage. That would allow future sales to be audited better. Departments would have to provide evidence that they had considered all relevant matters at each stage, and give reasons for decisions that were made.
I agree with my Conservative colleagues on the Committee that, all too often, the official appearing before it had nothing to do with the process that is being reviewed. If a checklist were introduced and could be monitored, it would be possible to ensure that guidance had been followed; otherwise, we would want to know the reason why. That should minimise the wasting of public money.
In the 27th report, on measures to combat housing benefit fraud, the issue was examined for the second time in seven years. It was revealed that more than £900 million had been lost as a result of fraud. The Department of Social Security was not even able to show whether fraud was on the increase, and could not provide all the information that was needed about types of fraud, including landlord fraud, and about variations at regional and local level. That essential information simply was not available. The absence of such reliable information should cast doubt on decisions made by the Department to invest in anti-fraud work. If it did not have the information that it needed, how could it be sure that its investment was targeted correctly?
The Government have committed themselves to reducing fraud in public finances. That commitment is intended to produce a welfare state that is fit for the new millennium that we shall enter in less than 12 months. An important part of the fight to reduce poverty and welfare dependency is the battle against fraud, which is founded on three principles. The first is fairness, and the restoration of public confidence in a social security system that ensures that benefits go to those who need them rather than those who seek to profit at the expense of the needy. The second is responsibility: fraud is anti-social, and that is contrary to responsible citizenship. Government assistance to the drive against fraud is the right expression of responsible citizenship. The third is honesty—ensuring public confidence in a social security system that deals effectively with those who act dishonestly.
The PAC has a crucial role to play in all that. Admittedly, it will involve taking a backward look, but the information is there, because of the work of the National Audit Office. The Committee can also seek and receive assurances that past mistakes and bad practice will not be repeated.
What we have not secured, over many years, is a cast-iron guarantee of the implementation of those assurances. Officials come and go, and it seems that, if a


new official does not do what the last one recommended, there are few sanctions, and there is little opportunity for the Government to act.
The Social Security Administration (Fraud) Act 1997 was a big step, perhaps the biggest that any Government have taken in the fight to reduce housing benefit fraud. I am sure that all members of the Committee, and other hon. Members, welcome the strong new powers given to the DSS and local authorities to tackle such fraud. The PAC rightly noted that those who design benefit systems
have to strike the right balance between addressing different needs equitably and fairly on the one hand and simplicity and security on the other. However, the present system does not find the right balance.
The Government are undertaking a fundamental review of housing benefit and its relationship to housing policy. I urge Ministers to note document HC 164 1997/98—also called "Measures to Combat Housing Benefit Fraud"—and the subsequent 27th report of the PAC as part of the process.
Like other Committee members, I welcome the establishment of the benefit fraud inspectorate, and its aim to drive up standards in anti-fraud work by inspecting individual local authorities. I am not aware of any local authority that has been inspected that regards the process as anything but helpful. It is right and proper that, following inspectorate action, all local authorities are required to provide the Secretary of State with action plans.
It is also right that, if the Secretary of State considers that a local authority has failed to respond sufficiently to the inspectorate's recommendations, or has failed to carry out its action plan, he or she can decide to issue directions to that authority. If that authority does not respond to the directions, there are powers to impose subsidy sanctions, or, in extreme cases, compulsory outsourcing of benefit delivery services—I think that that is privatisation. In addition, both the inspectorate's sharing of lessons that have been learnt in its inspection with other authorities and the exchange of good practices can only be helpful in the fight against housing benefit fraud.
In October, the Government statistical service published the results from the 1997–98 national housing benefit accuracy review. Although the report was welcome, the results made gloomy reading. The main findings were that, on average, 16 per cent. of housing benefit claimants receive incorrect payments; that includes both under and over-payments. The cost of that to the taxpayer is £840 million a year.
There are several ways in which that £840 million a year is lost—official error, claimant error, mildly suspected fraud, strongly suspected fraud—and that is only the money lost that we know about. Prevention is the key to cutting benefit fraud.
I am pleased to note that 85 local authorities are improving the standard of initial evidence that is gathered at the start of housing benefit claims—it seems self-evident that, if a claim looks dodgy, officers should not go any further with it—through the new verification framework. It is also welcome that £200,000 of Government money is being used to pilot a new initiative where local authorities will, for the first time, I believe, be able to use Department of Social Security solicitors to prosecute housing benefit fraudsters.
The commitment to put in place training from April 1999 to improve the skills of fraud investigators is welcome, but—here is another warning from the Public Accounts Committee:
Fear of detection can be an effective deterrent against committing fraud, but only if it is backed up by sufficient prosecutions and effective penalties. Yet the level of prosecutions by local authorities is incredibly low, at under 1 per cent. of detected frauds, and suspected fraudsters have a 99 per cent. chance of getting off Scot free.
It is like saying, "Mr. Fraudster, come here. There is a coffer of public money for you. Just take what you want." Can my right hon. Friends on the Treasury Bench assure me that the Government are willing to commit the resources that are necessary to ensure that 99 per cent. of fraudsters do not get off scot free?
I take great encouragement from the fact that we are having the debate and from the way in which the House's business has been arranged on this new Thursday. I hope that, as the House considers further modernisation of its working practices, hon. Members on both sides of the House will have further and increased opportunity to debate Select Committee reports and thereby question and hold to account the Government of the day, based on cross-party findings and reports.

Mr. Charles Wardle: It is clear from what has been said in the debate that there is agreement among hon. Members on both sides of the House that both the volume and incisive quality of the National Audit Office case load that is served up to the Committee by its excellent Committee Clerk are formidable. So is the chairmanship of the Committee by my right hon. Friend the Member for Haltemprice and Howden (Mr. Davis). Not one of us on the Committee failed to find himself on the receiving end of a little yellow piece of paper when we were in danger of over-running our allotted time. On that paper were the words, "One minute", so it was fun this afternoon to return the compliment in kind to the Chairman.
It would be worth drawing the House's attention to a wide range of subjects, but I should like to make some general comments first and then to focus on a few specific reports.
My first comment has already been headlined by the Committee Chairman and others, and I make no apology for repeating it for emphasis. There is a continuing pressing requirement for an extension of the Comptroller and Auditor General's remit to allow him access for audit purposes to sectors of public expenditure that he cannot currently examine.
If he is to be fully effective in his responsibilities and to present a complete picture of how taxpayers' money is being spent, the CAG needs not only access to non-departmental public bodies that are audited by private firms which are appointed by the relevant Secretary of State, but access, without hindrance or hassle, to private companies that take on work that is contracted out by central Government and paid for by the taxpayer.
The CAG should be able to pursue his investigations in local spending bodies, public sector companies, recipients of Government and EU grants, housing associations and many other such organisations. It should be a standard condition of all Government contracts that the CAG has the right to inspect the contractor's books where he considers it necessary.
My second observation is about the ability of the Public Accounts Committee to question consultants or professional advisers, along with the relevant accounting officer, when taking evidence. I believe that several Committee colleagues would agree that we could have done a better job probing where the use of public funds may have gone awry if we had been able to question such consultants.
I understand that merchant bank advisers or consultants may appear before the Committee in the near future. I hope that the Minister, whom I congratulate on her appointment to the Treasury, will agree that it could improve accountability if we could vet some of the consultants and advisers.
My third general observation is a small, but, I hope, constructive criticism about appropriation accounts. All too often, the format of those accounts is anything but user friendly to anyone but professional accountants and a few officials in the know. As they are public documents, it would be helpful if the accounts were presented in a less obscure fashion.
My fourth observation is a word of praise for the chief accountancy adviser to the Treasury and his resource accounting team. That has been touched on by the Chairman and others today, but it is worth emphasising.
The Committee's 67th report provides detailed evidence from the chief accountancy adviser of the basis on which financial management in Whitehall can be modernised. I hope that the House will keep in mind the key advantages that the Treasury plans to deliver when Whitehall switches to resource accounting. I am delighted that the Government are continuing the work on resource accounting that was begun by the previous Government.
There should be better management information about costs and assets, greater scope to control working capital and cash flow, a chance to focus on outputs as well as inputs and a more switched-on approach to financial control systems. That should empower middle-management ranks in the civil service as well as senior officials if it is used properly.
The hon. Member for Liverpool, Garston (Maria Eagle) spoke about Whitehall culture being difficult to change. If there is one initiative that will bring about welcome changes in the Whitehall management culture, it is resource accounting. It will enable the Government of the day to allocate resources in the public expenditure round more rationally if they so choose.
It is sometimes said that some members of the Committee, myself included, are readier to criticise witnesses than to praise them. I hope that my praise for the resource accounting team shows that credit is given where credit is due. I am sure that colleagues would agree that there have been other instances during the previous Session when witnesses have been warmly commended. Her Majesty's Coastguard is one example that comes to mind. However, it has to be said that the preponderance of NAO reports that are considered by the Committee draw attention to cock-ups, confusion, inaction and inefficiency. It is right that we should give vent to our criticism where it is intended to be constructive.
The Committee report that leaps out for attention and is highly topical, bearing in mind this week's debate in Strasbourg, is the 35th report, which is on the 1996 annual report of the European Court of Auditors. I could not find a Treasury minute responding to that report, but this

week's protests from Members of the European Parliament, although they proved to be in vain today, rightly put Jacques Santer and his commissioners in the dock for many of the same reasons that prompted the Committee to condemn the EC's hopelessly inept and corrupt financial performance in the previous year. For several years, the Court of Auditors has been unable to provide a positive assurance on the legality and regularity of Community payments. The Public Accounts Committee endorsed the damning verdict from the Comptroller and Auditor General that the European Commission still has a long way to go before it attains the quality of financial reporting expected as the norm for Government accounts in this country.
The Committee expressed concern about, among other things, the high level of unnecessary expenditure resulting from the failure of common agriculture policy regulations to take account of movements in world market prices. It was also worried that the systems for ensuring that recovery of customs duties payable to the European Commission did not operate effectively, and about the high level of errors and delays in structural fund payments.
In short, the Committee drew attention to a complete shambles at the Commission. Although total expenditure in 1996 was a relatively modest £57 billion, the House cannot ignore the Commission's transparent ambition, following hard on the introduction of the single currency and European monetary union, first to harmonise EU taxation and then to ensure that the greater part of taxation is raised at the federal centre rather than within member states. Therefore, it is fundamentally important that we make known such criticisms of the administration in Brussels.
Sometimes the European sickness of chronic maladministration, highlighted this week in Strasbourg, affects the United Kingdom directly. The Committee's 52nd report revealed that the Intervention Board Agency, which accounts to Parliament for the £4.2 billion gross cost of implementing CAP measures in this country, could not reconcile transactions of £30 million on its accounts, and that it had spent almost £11 million—a figure that beggars belief—on consultants in a failed attempt to balance its books. However, no one at the agency felt the need to resign to atone for those shortcomings.
The 33rd report, into the Crown Prosecution Service, revealed a similar determination on the part of its then director to shrug off responsibility for the failure to establish a computer system to keep track of cases across the service. In spite of a virtuoso performance of self-advocacy before the Committee, the director lost her job shortly afterwards. I do not think that that was down to the Committee directly, but at least there was some action in that case.
No such fate befell the permanent secretary at the Foreign Office or his director of resources, who feature in the 34th report. Unfortunately for them, as we heard earlier, they had to explain away a horror story involving a false payments scam at the British embassy in Amman, Jordan. That was barely a year after the permanent secretary's predecessor had blandly assured the Committee that financial controls in Amman were all hunky-dory, even though the embassy had been taken for an embarrassing ride in connection with bogus pension payments. I do not think that anyone ever got to the bottom of that scam.
The Committee hearing with the accounting officer from the Foreign and Commonwealth Office, Sir John Kerr, attracted some defensive letters to the press from old FCO hands, but those letters made their authors sound fearfully old fashioned. I am pleased to say that a video of the session in which the Committee took evidence from the permanent secretary—I nearly said of its interrogation of him—is now used as a case study by the Civil Service College.
I should add that, to his credit, Sir John Kerr—for whom I have the highest personal regard—has sought to rid the Foreign Office of its previous rather haughty indifference to the need for professional financial management by appointing a squad of qualified accountants and young executive types with masters degrees in business administration. They have replaced the amateur generalists who, after two weeks' training, were traditionally put in charge of the books. I am sure that those changes are to be welcomed. They will help remind our diplomats that, although they do an absolutely excellent job for the United Kingdom abroad, they incur an expense for taxpayers whenever they represent our country.
The 43rd report showed that the taxpayer was treated much more shabbily, both in the scale of the rip-off and in terms of barefaced greed, by the privatisation of Belfast international airport. In a management buy-out, a team of civil servants were able to pay £32.7 million for the airport. Just two years later, they sold it at a profit of £74 million, with no clawback for the taxpayer. As I said in Committee at the time, I am all for people getting rich through hard work, but the group gained more than £3 million a month during its brief ownership of the airport. That was a cynical exercise in profiteering, over which there were scarcely any checks. Given the rather terse official response to the Committee's criticisms of that case, I am sorry to say that it was difficult to judge whether lessons essential to the taxpayer's future wellbeing had been learned.
Finally, I turn to the 37th report on contingent liabilities in the dependent territories. The Foreign Office's responsibilities for governance, disaster preparedness, risk management and financial controls are diverse, and it cannot be easy to maintain improvements. However, the most pressing concern is drug trafficking. The Committee was told that 30 per cent. of the cocaine reaching the UK comes via the Caribbean. The United Nations estimates that 400 tonnes of cocaine destined for the United States and Europe transits the Caribbean.
The Foreign Office, with the help of the National Criminal Intelligence Service, and two Royal Navy frigates, is helping the five Caribbean dependent territories to resist drug trafficking but, ominously, Sir John Kerr told the Committee that the fight against drugs is taken less seriously in some independent Caribbean countries than in the dependent territories.
Among the former British colonies and protectorates in the Caribbean, Belize—formerly British Honduras—became especially vulnerable to drugs transhipment after the British defence forces withdrew in 1994. As other countries in the region have begun to tighten their efforts against narcotics, there is no doubt that traffickers exploit

Belize, which is a convenient back door to the cocaine route to the United States via Mexico, Jamaica or the Cayman Islands.
As the United States Drug Enforcement Administration has confirmed, Belize has a long unprotected coast line, large tracts of rainforest and unpopulated areas that facilitate the movement of much of the south American cocaine trade to the United States market. I hope that a future NAO report will consider the effectiveness with which British taxpayers' money is deployed to help resist drug trafficking in the wider Caribbean area and not just in the dependent territories.
There is no doubt that there is growing public awareness and interest in clearer accountability from those who spend taxpayers' money. Demands on the National Audit Office will undoubtedly grow but I am sure that it will respond well to the challenge. Whitehall will face inescapably greater pressure to reform and modernise its financial and management controls. That reform is long overdue, and can only be a good thing.

Mr. Christopher Leslie: In 1799, a Tory Prime Minister, William Pitt the Younger, introduced income tax in this country, in part to fund the Napoleonic war. The Inland Revenue has commemorated that momentous innovation with an exhibition at Somerset house, although I am sorry to say that tomorrow is the last day on which it will be open to the public.
Some people may say that we should not celebrate the invention of income tax. People may call me eccentric, but I resent paying my income tax least of all the bills that come through my door because, as a Member of Parliament, I have a fairly good idea about where my income tax is spent. It is spent on schools, hospitals, social housing, transport and all the other vital public services without which we would all be a lot poorer.
After about 200 years of income tax, it is important that we recognise that the main public sector safety valve ensuring that taxpayers' money is spent efficiently and effectively and that it achieves value for money is the Public Accounts Committee, working in co-operation with the National Audit Office.
I was privileged to serve on the Public Accounts Committee until November last year, when I moved on to pastures new. The Committee certainly provided me with a great education in how government works, where money is spent and problems can occur and what solutions might be available. I join other hon. Members in paying tribute and thanks to the staff of the PAC as well as to Sir John Bourn, the Comptroller and Auditor General and the other staff of the National Audit Office for all their excellent advice and assistance in the previous Session. I also pay tribute to the chairman of the PAC, the right hon. Member for Haltemprice and Howden (Mr. Davis), for all his help and assistance and for his impressive scrutiny and his collegiate approach throughout our non-partisan hearings.
About a tonne of reports must have been produced from the many hearings. The evidence is on the Table, which is weighed down by the bulk of blue paper that the Committee approved, often paragraph by paragraph, in many of our sittings. So we have worked hard. I cannot go into all of the reports, but I will focus my attention on some of the most important findings of the past year. Unsurprisingly, most relate to privatisations, to which other hon. Members have referred.
The findings on water privatisation have not been mentioned. A year ago, the PAC heard evidence from the Office of Water Services into the regulation of the quality of services for customers. We questioned Mr. Ian Byatt, the Director General of Water Services, about his duty to secure the proper financing by water companies of quality water and sewerage functions and the fact that that depends on getting the privatised companies to give priority to reinvestment in the utility's infrastructure. Clearly, Ofwat regarded the main trade-off as finding ways to get money to the customer, by ensuring that prices were reduced, or to get companies to spend their resources on infrastructure, the drainage network and so forth.
Those are not the only options for those companies, which are making a large profit. In that hearing, we learned that massive dividends were paid out to shareholders. The profits were leaking out of the water companies. Rather than being reinvested in better-quality services, the money was going to the shareholder. Two interesting statistics came out during the hearing. More than two thirds of the total pre-tax profits of the water companies go out of the industry into dividends, so it is not reinvesting as much as it should be. That has meant that, on average, nearly a quarter of the typical customer's bill has gone straight to finance dividend payments.
The PAC's 36th report concluded that dividend payments were at an unacceptable and unsustainable level, potentially putting at risk investment and the quality of services to customers. Therefore, we recommended that Ofwat, in particular, should consider instituting further safeguards to protect customers.
Ofwat has responded fairly well, by reiterating its belief in RPI minus X as a regulatory system and saying that
dividend policy should be transparent and must not put at risk the companies' ability to discharge their functions".
We must reconsider, though, how better to ensure that price cuts and infrastructure investments are achieved as a matter of priority and that profits are not put before the services that need to be provided to the customer.
The other privatisation inquiry that stands out most clearly in my mind was that into the railway rolling stock companies. I do not know whether hon. Members saw on the news yesterday that a baseball hit by Mark McGwire, which set the record-breaking 70th major league home run, was sold in New York for £1.65 million by the man in the stand who had caught it. Anyone who thinks that that was a fortuitous windfall may not have heard the story of the railway rolling stock companies and the few former British Rail managers—three in particular—who made an absolute killing during the privatisation exercise. For example, Mr. Jukes from Forward Trust, which is now called Eversholt, invested £110,000 as his initial stake and sold the company on only 12 months later for a personal profit of £15.9 million. Mr. Anderson of Porterbrook put in £120,000 and sold the company after only eight months for £33.5 million. Dr. Prideaux of Angel put in no money—he got the banks to front the company—and received £15 million.
It was enlightening to have the opportunity to question those three former British Rail managers about why they deserved that windfall. What special effort had they put in to earn that amount of money? The answer given to the PAC was that the risk that they had taken justified the massive return. When asked whether they deserved

the profit or felt a little guilty at having ripped off taxpayers so massively, it was not surprising that we did not get much of a response.
What annoys me, the public and other members of the PAC most is that the assets—the family silver—could be sold off by the previous Government at such an undervalued rate. They were almost given away. Those people made all that profit because, when they sold, the market recognised the true value. Unfortunately, the taxpayer did not get the money. That is why, in that report and subsequently, we looked into ways to reduce such windfalls. I was glad to see in the Treasury minute on that report that the Government accept that those windfall gains certainly risk discrediting privatisation and that they
will consider carefully in future sales mechanisms to prevent any purchasers from enjoying excessive windfall gains.
Such mechanisms are sometimes known as the clawback clause and we need to use those arrangements much more frequently.
Many other aspects of privatisation were raised in our hearings. Hon. Members have mentioned our over-arching report into value for money in privatisations. One aspect of that is a clawback arrangement that will ensure, particularly when high levels of uncertainty are associated with the sales, that we build into contracts ways to get the windfall right for the taxpayer and the Government. Another recommendation is that we must value companies properly in the first place, to ensure that the best price tag is put on them before privatisation so that the proper market value is gained for the taxpayer and that we do not merely give assets to the private sector because of dogma or ideology. If they are to be given away, there is a reason and there should be a gain to the public at large.
It is true that the report recommends that, if shares in privatisations have to be sold, it should be done in stages to test the market more effectively. I am glad to see signals that that is becoming a more acceptable practice for the public sector.
I do not think that any hon. Member has touched on the fact that the PAC recommended that close scrutiny should be given to pre-sale restructuring, so that the Government do not spend millions of pounds of taxpayers' money putting aspects of the public sector right and then hive them off to the private sector. If major amounts of public expenditure go on restructuring, the public should gain some reciprocal benefit.
On a number of issues, one felt that one could ask the same question of whatever witness came before the Committee. Advisers' and consultants' fees are always being raised in the PAC, and members of the Committee become exasperated. I think especially of the inquiry into design, build, finance and operate roads under the Department of Transport. We must consider advisers' and external consultants' fees throughout government to ensure that we always get value for money.
Fraud is part of the bread and butter of our inquiries. The right hon. Member for Bexhill and Battle (Mr. Wardle) reminded me of the fraud at the Amman embassy. Extrapolated downwards, the stationery budget equated to, I think, 300,000 biros. The amount of fraud on the mileage budget would have taken a car around the world 12 times—physically impossible in the time available. We must ensure that our accounting officers more rigorously monitor such day-to-day expenditure.


Many other management issues and lessons emerged. Those lessons should be internalised in the day-to-day operations of the Government.
I was pleased by the development of the new public service agreements initiative which evolved from the comprehensive spending review in the summer. Contracts between the Treasury and Departments mean that extra cash is provided to secure not only the services but modernisation and reform of the way in which Departments operate and of the services that they provide. That is a strong step towards better incentives for best practice in Departments, and places more responsibility on accounting officers and Departments.
Other hon. Members have mentioned the news on fraud going around the European Union. That is a clear example of a lack of good democratic auditing procedures as strong as those that we have established over the many years that the Public Accounts Committee has been going and it has led to great problems in European institutions. As a strong European, I think that, if we need government in Europe, it must be publicly accountable and the money spent must clearly be shown to be good value for money and to have been efficiently and effectively spent. Developing auditing processes in the EU is important.
I had to come off the Public Accounts Committee in November. I learned a lot from it and am sad to leave, but I was pleased that today's speeches showed that the robust tradition of scrutiny and good accountability for public accounts will continue for many years to come.

Mr. David Atkinson: I echo the congratulations offered by my hon. Friends to the new Financial Secretary on her recent promotion. She has been very helpful to me on the issue to which I shall confine my remarks; it will come as no surprise to her that it is the subject of the Public Accounts Committee's 66th report, "Managing the Millennium Threat". It was published last July and the Treasury responded in October. Given its importance, I am sorry that the issue was not highlighted in the motion.
As the first hon. Member to raise the issue way back in 1995, I want to use this debate to warn that we are not doing enough and have not done enough to avoid problems that are now inevitable, as more and more experts are concluding. It is essential that contingency plans are in place well before the end of this year.
When I first raised the issue at Prime Minister's questions, the entire House fell about in response to the warning that I gave my right hon. Friend the Member for Huntingdon (Mr. Major) about the consequences for business and Government if it was not addressed. I do not suppose that there were many in the House then who knew what I was talking about; most probably thought that what I was suggesting was silly, sensational and apocalyptic. To be honest, that had been my view. It was only because a constituent in the computer business had raised the issue with me at a surgery that I made inquiries and became convinced that he was right to be concerned that no one was responding adequately.
Although my right hon. Friend the Member for Huntingdon did not refer to it in replying to my question, I had already learned from him that his Government were

planning and implementing measures that were to put this country ahead of most others in terms of awareness and taking action in the public sector. That is contrary to the picture painted by Ministers of this Government, who suggest that they found the cupboard bare when they came into office. The proof of that, if it were necessary, can be found in the report of the National Audit Office published on 21 May 1997, "Managing the Millennium Threat", which was clearly prepared before the general election.
I accept that some of the answers that I received to the questions that I tabled to every Department in early 1996 were complacent and short on detail. However, as the NAO report confirmed, the central information technology unit of the Office of Public Service, supported by the Central Computer and Telecommunications Agency, was ensuring that central Government were preparing our public services in good time to anticipate and avoid problems in the three years before the millennium.
In reply to my Adjournment debate in June 1996, the first detailed debate in the House on the matter, the Minister responsible for information technology, my hon. Friend the Member for Esher and Walton (Mr. Taylor), announced the establishment of TaskForce 2000, a Department of Trade and Industry-sponsored, private sector-financed public awareness campaign aimed at ensuring that British business would be millennium ready.
I apologise for harking back to the past, but, to my knowledge, no one has put the record straight in the House on the previous Government's response on the millennium bug. It is, of course, not mentioned in the 66th report. However, I stress, as I always have, that I do not believe that voluntary action by business, in response to DTI exhortation and the TaskForce 2000 campaign, will be enough to ensure our millennium readiness. That will have a knock-on effect on the provision of public services.
Such is the nature of the issue that it is not enough to ensure that the necessary action on the computer systems of Departments and public sector agencies, as well as those in the business sector, has been taken, including sufficient time to allow the testing essential to ensure millennium compliance. If the systems with which those computer systems are linked, such as those of their suppliers or receivers, are not compliant, theirs will also fail to perform after the first midnight of the new millennium. As is becoming more widely understood, it is an all-or-nothing situation. In a network of computer systems, the chain is strong as its weakest link. If one system is not compliant, all those with which it is linked are also at risk.
There will always be reluctance to disclose true millennium readiness, especially in the private sector. There are many reasons for that, including maintaining competitiveness, the risk of future legal liability and the difficulty of obtaining insurance. As the Chairman of the Public Accounts Committee said, the civil servants who assured the Committee that we will be all right on the night next new year will not be around to pick up the pieces. That is why the Pledge 2000 initiative mentioned in the Treasury response, which the Government have signed, to the 66th report will prove not to be worth the paper on which the signatures are written.
The non-legally binding abstracts issued by the urgent issues task force sub-committee of the Accounting Standards Board on disclosures on millennium


compliance relating to business, to which the Financial Secretary referred in her reply to me last year in her previous role at the Department of Trade and Industry, will prove to be totally inadequate as the only yardstick of progress in this country. Both serve only to encourage over-optimistic and complacent conclusions that do not reflect the reality.
For the reasons that I have given, I felt that there was no alternative but to legislate to introduce a statutory requirement on company directors to assess the millennium compliance of their company's computer systems and to report the outcome of that assessment in their annual report to shareholders—the owners of the company—together with the action that they were taking to safeguard the company and the shareholders' investments in it if its systems were found not to recognise the year 2000. That was the object of the private Member's Bill, the Companies (Millennium Computer Compliance) Bill, which the House allowed me to introduce under the ten-minute rule procedure in November 1996. The Bill had reached its Report stage by the time of the general election. I had amended it in Committee in response to suggestions that I received from the top 100 companies that I had approached, many of which supported my Bill.
I contend that, if the previous Government had allowed my Bill to become law before the dissolution of Parliament, this country would now be far and away ahead of all others in the millennium readiness of both its public and private sectors. Company annual reports for the years ending 1998 and 1999 would have seen to that. Even the present Government had an opportunity to support the Bill when the House allowed me to reintroduce it in June 1997 after the general election. I appreciated the fact that the Minister courteously listened to my arguments on that occasion. Instead of supporting my Bill, the Government chose to suspend TaskForce 2000 before replacing it with Action 2000 almost six months later. In hindsight, I believe that that delay of almost six months will prove to have serious consequences in terms of missed targets and escalating costs.
The concerns about the millennium bug are reflected in the Public Accounts Committee's 66th report. It concludes:
we cannot be sure that government business will not be disrupted in the year 2000…we are concerned about the readiness of the wider public sector to cope with the Year 2000 issue".
In response to the Committee's concerns that the NHS executive could not give an assurance on the safety of patients, the Treasury was right to say that it would be dishonest to guarantee that there would not be a single unforeseen mishap. The truth is that no one can guarantee that, where date-related computer systems are involved, nothing will go wrong at the end of this year. No one knows for sure how widespread the year 2000 problem is likely to be.
We know that many modern computer systems are vulnerable to flawed software. Even Windows 98 is not millennium compliant unless action is taken and then tested, despite the assurances of Microsoft. The PAC was therefore right to urge in its report that the Office of Public Service should
Ensure that contingency plans are in place, and are tested.
It said:
We look to the Office of Public Service to require all public bodies to have comprehensive robust business continuity plans in place by January 1999.

The Treasury has responded by saying that a number of Departments and agencies have yet to begin work on dedicated year 2000 business continuity plans. I suspect that that situation applies throughout the entire public and private sectors of this country. There will be all too few contingency plans in place, and they will be too late to be effective.
We still have the time, just, to replace a reliance on a voluntary requirement to have in place contingency plans with a statutory one. That is why this morning I secured from the Public Bill Office the opportunity to introduce a new Bill under the ten-minute rule procedure to require organisations responsible for providing essential public services and critical infrastructure to draw up contingency plans in the event of their computer systems failing to deal with calendar dates after 31 December 1999; to require such plans and the names of those responsible for them to be notified to an appropriate authority; and to require the plans to be made available on demand. I shall seek the leave of the House to bring in the Computer Millennium Non-Compliance (Contingency Plans) Bill on Tuesday 2 February.
If enacted, my Bill would do much to ensure that the essential public services on which all of us rely, especially the most vulnerable, will be protected in less than a year from now; otherwise, we shall see develop over this year a growing mood of uncertainty and alarm, which will alter the behaviour of the public and of financial markets. We still have time to avoid that situation.

Mr. Alan Campbell: I am pleased to be able to speak in this debate and pleased, too, that this year we are dealing with our own reports rather than with reports inherited from the previous Committee—although I suppose the Minister may not share my sense of familiarity with them. I associate myself with the comments made about the work of the Chairman of the Public Accounts Committee, the Clerks and the National Audit Office. I add my warmest wishes to my hon. Friend the Minister in her new role. She brings with her a considerable reputation from the Department of Trade and Industry. I wish her well.
The Committee produced 67 reports over the year. The House will be relieved that I do not intend to comment on all of them. I shall limit my comments to three—the 48th report "Ministry of Defence: Sale of the Married Quarters Estate", the 61st "Getting Value for Money in Privatisations" and the 65th "Privatisation of the Railway Rolling Stock Leasing Companies". I wish to comment on those reports for two reasons. First, privatisation is an on-going issue. The Government have signalled their intention to sell shares in the Commonwealth Development Corporation, the National Air Traffic Services and Belfast port. We have also collected a national asset register that presupposes that in the fulness of time those assets will also be sold off.
Secondly, the 61st and 65th reports were published when the House was in recess. The 65th attracted some attention, such was the scale of public concern. The reports raise important issues for the House: they should be debated on the Floor of the House and our debates should be on the record of the House.
My hon. Friend the Member for Shipley (Mr. Leslie) has already alluded to the 65th report. In July 1992, the then Department of Transport issued proposals for railway


privatisation. That was followed in 1993 by the Railways Bill, which provided the legislative background to privatisation. British Rail began to reorganise its operations for sale. The three rolling stock companies or roscos were to lease stock to the train operators. That was to be a long-term investment. It was assumed that the rolling stock would have a lifespan of about 30 years. I suspect that there are people travelling on trains who would regard 30-year-old stock as something of a luxury, but it would be a long-term investment. In 1996, the roscos were sold off for about £1.8 billion, but the important point is that, within a few months, they were sold on for £2.7 billion. In that process, the taxpayer lost out considerably and British Rail managers in post and former British Rail managers made personal fortunes. We have already heard that, for personal investments of between nothing at all in one case, and £120,000 in another, those managers received windfalls of between £15 million and £33 million. Perhaps to rub salt into the wounds, they admitted to the Committee that, when they sold the companies on, none of them paid capital gains tax.
The Committee found it significant that two of the three buyers of the roscos were management buy-outs. Employee buy-outs were envisaged in section 113 of the Railway Act 1993, but, with hindsight, I am quite sure that the employee buy-outs and the sell-offs were not the type of management buy-outs envisaged in the Act. I am very much in favour of employees owning their own companies, or certainly having shares in their companies, but that type of management buy-out does not fit my model, either.
It became clear that being a manager in British Rail at that time gave certain advantages. All the potential bidders who came before the Committee said that they had access to what they called the basic information—in one case, they said that they had had too much information—but much of that information was provided late, and the British Rail managers were in a much better position to deal with it and to realise its importance. There is an enormous difference between having information about a company and understanding how that company works—that is of fundamental importance for all privatisations where management buy-outs are involved. The British Rail managers had that understanding so, as the Committee pointed out, the playing field was not level.
Furthermore, one potential bidder, who came before the Committee and who later bought one of the roscos, said that, when he had contacted the sellers asking for an indicative price, he had been told £1 billion each. Even when the roscos were sold on, they did not attract £1 billion each. Mr. Souter was able to shrug his shoulders at that when he appeared before the Committee; he had lost out the first time, but presumably thought that he would gain the second time. I am sure that it is in the nature of Mr. Souter's work that he believes that what goes around comes around, and that his time will come. The question for the Committee and for the House is when the taxpayer's time will come in these deals.
The Department of Transport was aware of the loss-making potential of those deals and yet, as we have already heard, no clawback arrangement was made. The funding arrangements for the channel tunnel rail link

contained a clawback provision over the next 15 years. It is not impossible to arrange such provisions, but the Committee was told that clawback was not seriously considered and it did not find its way into the final arrangements for the sale of the roscos. The Department was told to get on with it: it was told by Ministers to carry on regardless, and that the shortfall could be blamed on market conditions. It is clear that, by selling those companies in the way that they did, the Government helped to create the very market conditions about which they had been talking.
In April 1994, the plan was put to the Prime Minister and sanctioned at the highest level. Warnings were put in a memorandum; the Committee pointed out—and I point out again—that it wished that the accounting officers had put that information in a letter. The officers have a responsibility not only to their Departments and to Ministers but to the House, and it would have been nice if they had discharged that responsibility by putting their information and warnings in a letter.
We were told that political uncertainty had affected the sale, but most of the people who appeared before the Committee said that railways would have be on the Government's agenda whichever party won the election. They were told that investment could not come only from the taxpayer, which suggested that the companies would have to look to the private sector. As most of those who came before the Committee admitted, they realised that the new arrangement would carry Government subsidy and that if—almost unimaginably—it all went horribly wrong for the railways, the Government would have to step in.
Where was the uncertainty in that? The people who recognised that there might well be uncertainty but who could recognise the potential were, of course, the managers themselves, who went on to buy and sell on the roscos. Almost predictably, the Government went for a quick sale, the market got the depressed sale that it had anticipated and quick profits were made. Although I agreed with much that my hon. Friend the Member for Liverpool, Garston (Maria Eagle) said about the role of civil servants, I want to point out that those sales were ministerially led; they were not led by departmental civil servants.

Mr. Phil Hope: Was not the period that elapsed between the management buy-out and the time when the managers sold on the rolling stock companies as little as seven months? It is difficult to justify the assertion that market conditions were responsible for the conditions of the original sale, given that, only a few months later, the companies were sold on for such huge and unacceptably high profits.

Mr. Campbell: I am grateful to my hon. Friend for making that comment. It is precisely the point that there appears to have been some miraculous change in market conditions, and I shall return to that matter in due course.
I should like to move on to the Committee's 48th report, dealing with the sale of the MOD married quarters estate. Although it is easy to see how rolling stock might deteriorate over time and fall in value, it is hard to understand how property prices for the married quarters estate could fall in value over a period of 25 years. The evidence to the Committee showed that the MOD's


preferred option in 1994 was some kind of housing trust. In summer 1994, new Ministers at the MOD again sanctioned the sell-off and again it was sanctioned by the highest authorities. Annington bought the houses, which, as we have already heard, are rented back to the MOD. Annington paid £1,662 million; that is a considerable amount, but, on the MOD's estimate, it is still £140 million less than it would have cost the MOD to run the houses for the next 25 years, and at the end of that time the MOD would, presumably, still have owned the properties.
The Committee was told, in most of sessions at which privatisation was discussed, that privatisation is about the transfer of risk. It is hard to see where the real risk lies for Annington in that deal, but I know where the risk lies for the taxpayer. The MOD spends about £350 million a year in rent, whether or not the houses are occupied, and in December 1997 some 13,600 MOD homes were unoccupied, at a cost to the taxpayer of more than £60 each a week in rent. The MOD spends at least £1,500—probably considerably more—on each house every year on maintenance costs, and it admitted that it still pays £11 million a year to keep families in private accommodation. If we add up the costs of the sale and of the outgoings over the next 25 years, we see that the taxpayer, or the then Government, received £1.6 billion for the deal, but that the actual cost to the taxpayer would be £3 billion over that period. To rub more salt into the wounds, Annington did not ask to pay the money in two tranches, but was asked to do so. Again, the taxpayer lost out. I understand that one anonymous employee of Annington described the matter as a "licence to print money". However, yet again there was a huge sale for which Ministers created the market conditions.
I have a number of concerns about that and other privatisation matters and welcome the 61st report, on best value for privatisation. I hope that the Government learn lessons from it, for in the past it seems that despite all the warnings, minutes and guidelines that existed, if Ministers wanted to push decisions through, they did so.
I was interested to hear the comments of the hon. Member for Faversham and Mid-Kent (Mr. Rowe), who unfortunately has left the Chamber. He spoke about examining public expenditure or privatisations before they actually happened. I shall return to that theme later.
As has already been pointed out, it is not for the Committee to be for or against the policy of privatisation: to some extent, we are all privatisers. However, the Committee has a role to play when the implementation of that policy fails to give value for money to the taxpayer. The more privatisations we looked at, the more some of us became convinced that there had been a headlong rush towards sell-offs under the previous Government, either to fill the coffers or to spread the perceived benefits of privatisation. That is for others to judge. However, that policy produced what my right hon. Friend the Member for Swansea, West (Mr. Williams) memorably called a "scorched earth" policy—or perhaps a "final solution" would be a better term.
It is not as though there are no watchdogs in this area. However, if I owned a watchdog—perhaps I should say that I do in case there are any burglars in my neighbourhood—I would not be very happy if it did not bark until the deed was done. It is no good the dog's barking after the burglar has been in and run off with the family silver. I wonder whether there should be earlier

scrutiny. I appreciate that it would be difficult to identify who should carry it out: issues of commercial confidentiality would presumably preclude the House from assuming that role. The National Audit Office and the Public Accounts Committee already have a scrutiny role, but that comes into play after the event, and it would muddy the waters if they provided advice on the process beforehand.
Would it make that much difference if the decision to proceed were made almost come what may? By the time the Public Accounts Committee considers the matter, the Minister concerned has often left office or moved on, as has the accounting officer. I think that the charges pending against accounting officers should be considered before they move on so that the Public Accounts Committee could become involved earlier in the process.
This debate is not about closing the stable door after the horse has bolted. These reports are made more difficult to swallow because we were told for a long time that the horse was a nag that was not fit to enter the 2.30 race at Hexham. However, we often discovered within a few weeks of the sale that the horse had turned into a grand national winner. The jockey who rode off with the horse not only received no share of the winnings but did not achieve the asking price. Yet we see the occasional glimpse of a jockey opposite.
The taxpayers deserve better. Governments are very good at collecting and spending taxes: they should be better at safeguarding taxpayers' interests. We hear a lot about tax at election time, usually from aging rock stars and game show hosts who threaten to leave the country if taxation is increased—although unfortunately they seldom do so. They are probably in a position to look after themselves. I am concerned about the small business people, the teachers, nurses, pensioners and the girls on the check-outs at Morrisons who do not have to earn very much before they start paying tax. Their parents and grandparents paid tax that was used to buy and sustain public companies, and they deserve better from their investment.
I hope that the Government recognise those concerns, because the issues remain current. The Public Accounts Committee will continue to hold current Ministers and accounting officers responsible for their decisions.

Mr. Alasdair Morgan: I wish to refer to the 42nd report of the Public Accounts Committee, which deals with the Skye bridge. I shall be relatively brief, as many of the issues were covered by the hon. Member for Ross, Skye and Inverness, West (Mr. Kennedy).
The Skye bridge was the first private finance initiative project—the former Tory policy has apparently now become new Labour orthodoxy and been re-branded public-private partnership. The handling of the project was a disaster which the Committee rightly criticises. A few quotes from the report will illustrate that fact. The report states:
This was a serious omission in their evaluation of the project which leaves a question mark over its value for money…Toll payers' interests were insufficiently protected…We are not satisfied that the costs of the bridge are reasonable … This was contrary to good practice, unfair and imprudent…It is highly unsatisfactory…A question mark must remain over the extent of value for money obtained.


The project was a disaster which, thankfully, the Government responsible paid for, together with their other mistakes. One might argue that at least we got a bridge at the end of it. The Public Accounts Committee recognises that fact in its first conclusion, which states:
The Department achieved their primary objective, the provision of a privately financed tolled crossing to Skye.
In its eagerness to find a statement that was not critical of it, the Scottish Office responded to the Public Accounts Committee by saying:
The Scottish Office Development Department is pleased that the Committee recognises that the bridge brings benefits.
It is hardly likely to have done anything else, given that Skye was previously an island unconnected to the mainland. Any bridge built by anyone would presumably have brought some benefits to the people of Skye. However, the anger in Skye and in Scotland remains.
The Labour party in opposition peddled the story in the highlands and islands that it would abolish tolls when it came to power. However, there has been only a reduction in tolls—to which the Committee refers in paragraph 17 of its report—for frequent users of the Skye bridge. If one is prepared to shell out £26, one can get one's tickets at a discount.
Many car owners on Skye, in my constituency and throughout rural Scotland would not own a car if they lived in an urban area. They cannot afford to run their cars: they do so because it is a necessity, as sufficient public transport does not exist. A disproportionate part of their family budgets is devoted to running a car. The annual MOT test can cause a family budget crisis if the car fails to pass. It is claimed that £26 is somehow a concession for those people, but I think that the charge is most unfair as it bears so heavily on those who can least afford to pay. The Government must do more work in order to bring the benefits of a really low toll to the people of Skye and the highlands and islands. Why should the people of Skye and the highlands pay for a defective scheme and for the mistakes of the previous Administration?
In 1997, this Government were prepared to write off £62 million in debt on the bridge across the Humber and to reduce interest payments on the remaining debt. Will the Government explain why the people of Skye are somehow less deserving of having their debt written off? After all, the fee for a return crossing on the Humber bridge is £2.60 and it is £11.20 on the Skye bridge.

Mr. Charles Kennedy: I have already had my shout, so I am loth to intervene. However, I must raise a point about the Government's concessionary package—which was much less than Labour implied at the time of the election. I know from my own experience that those in the poorest categories, particularly the elderly, might make the crossing only two or three times a year, mostly to travel to Inverness for hospital visits. Forcing such people to purchase a book of 20 tickets for £26 adds to the disadvantage and discrimination that they already suffer.

Mr. Morgan: I thank the hon. Gentleman for making that valid point. Added to the cost of the crossing is the substantial cost of petrol in rural areas, which has not been helped by some of the Government's policies. It is a

mistake to think that people travel regularly from Skye to Inverness. The hon. Gentleman is correct to say that some people must wait two or three years before they realise any benefit from their £26 investment.
The Government have said that there is no funding available to buy out the concession contract. In light of the Committee's report, do the Government consider that a variation of the windfall tax might be appropriate in the case of the excess profits that are clearly being made by the concessionaire? Would it be appropriate to use such a tax to buy out the contract? The Bank of America now owns 97 per cent. of the bridge and is presumably clawing back 97 per cent. of the profits from its concession. It is currently being sued in the United States to the tune of £1 billion by the city of San Francisco and some 250 other local authorities in that country. There could be no more apt a target for a windfall tax.
The report also says that there is no guarantee that the toll will be removed even once the debt is repaid and the concession ends. Will the Government now give a guarantee in that respect? The Scottish Office's response to the part of the Committee's report that broached that subject was fairly opaque and was included in a series of responses that the hon. Member for Ross, Skye and Inverness, West described as casual.
The hon. Gentleman also mentioned that Professor Robert Black of Edinburgh university said last week that the fact that the assignation statement identifying the authorised concessionaire had not been published along with the toll order was a fatal flaw. The legal basis for collecting tolls now seems to be on shaky ground. Surely the legitimacy of the whole operation urgently needs investigating, as the hon. Member for Ross, Skye and Inverness, West has already suggested. Once the result of the current action before the Court of Session in Edinburgh is known, that investigation must be set up as a matter of urgency.
We need a thorough inquiry into the complex web of financing and contractual obligations. The inquiry must be conducted in a transparent manner because throughout the saga we have lacked any such transparency. As every year goes by, the public and hon. Members become more and more confused about the matter.
I turn finally to another matter that has been mentioned in the debate. The Chairman of the Committee, the right hon. Member for Haltemprice and Howden (Mr. Davis), referred to the nature of scrutiny arrangements under the new Scottish Parliament. I believe that the system will increase the scrutiny of public expenditure in Scotland. No United Kingdom committee, even one with the appetite for work that the Public Accounts Committee seems to have, could hope to give the amount of scrutiny to Scottish expenditure that it will receive from a committee of new Members of the Scottish Parliament, who presumably will be eager to call to account the civil servants in St. Andrew's house. That has too seldom happened in the past.
The hon. Member for South-West Hertfordshire (Mr. Page) followed the same line, but his suggestion that the Public Accounts Committee should continue to investigate activities in the devolved departments in Scotland is a recipe for chaos and conflict and would be


deeply resented in Scotland. My party wants the new Scottish Parliament to work effectively, but it will not be assisted in that if Committees in this House interfere.

Mr. Page: I made that suggestion only in regard to the extra moneys that will be paid by the English taxpayer to the Scottish taxpayer.

Mr. Morgan: I do not think, Mr. Deputy Speaker, that you would allow me to rehearse the argument that Scotland is not subsidised by the UK taxpayer and that, if anything, the cash flows in the other direction. I would be willing to have an argument about all kinds of expenditure against all kinds of income which I think we would win, as we have done in the past, but I shall move on.
Later in his speech, the Chairman of the Committee referred again to the need for parts of the United Kingdom to learn from the experience of other parts. He cited the Committee's report on cataract surgery in Scotland. After devolution, any report produced by the Scottish Parliament would be just as readily available to Departments elsewhere in the United Kingdom as a report by the House on Scotland currently is. What matters is the willingness of Departments and agencies throughout the United Kingdom to learn from the experience of others in the UK and, for that matter, in Europe.

Mr. Geraint Davies: I, too, thank all those at the National Audit Office, Sir John Bourn, the Committee Chairman and, in particular, my right hon. Friend the Member for Swansea, West (Mr. Williams), whose experience was helpful to all members of the Committee.
I also congratulate the new Financial Secretary on her appointment; I am sure that she will bring a wealth of experience to her new role. Last night, I hosted a forum of 50 businesses in the House, which was attended by her successor, by Lord Clinton-Davis, and by the Minister for Energy and Industry, who all sang her praises. She will bring a businesslike approach to her new role.
It is a great privilege to be a member of the Public Accounts Committee because it is the premier Select Committee. Other Select Committees receive minuscule support in terms of the numbers of staff they have compared with the National Audit Office. That is right, because there is £5,000 of Government expenditure for every man, woman and child in the country. It is of key importance that Governments deliver value for money. The new Government, with their focus on outputs and value and the public service agreements that have been referred to, are in favour of that approach. It is important that we are pushing in the same direction.
My background is in multinational companies, where I managed product development, marketing and advertising for Europe and Britain before starting my own businesses. I was also leader of Croydon council, the largest council in London. I came to the Committee with those perspectives. I was surprised that Departments did not adopt proper accounting techniques and, in particular, that they had no apparent idea of cashflow or asset management. That is now being changed through the introduction of resource accounting, which is welcome. Through more rational asset management in individual Departments, we shall be able to make great savings and create opportunities for the taxpayer.
Local government is often regarded as the poor relation of central Departments, but councils already perform asset and capital management and use performance indicators, which are now being included in public service agreements. Previous speakers have mentioned parliamentary accountability for that expenditure. Councils are audited by the Audit Commission, but there is not a Select Committee considering their expenditure. Perhaps the Environment, Transport and Regional Affairs Committee should do that, as the Chairman of that Committee has suggested. Other hon. Members have mentioned the lack of accountability of the Housing Corporation, housing associations and quangos and the need for more rigour in European expenditure to bring greater confidence as we move towards a new Europe.
Hon. Members have referred to the accountability of those who are meant to be responsible for expenditure—the so-called permanent secretaries, who are in fact semi-permanent because, as career civil servants, they move on from a post as soon as the Public Accounts Committee catches up with them. We need to consider a system of accountability for those individuals. A problem in many of the Departments that we have studied is that many civil servants have not had sufficient financial training. Departments do not have enough accountants and financial or commercial experts to focus on value for money and outputs. There are great people in the civil service, but we need to strike a commercial balance.
The Government are considering more partnerships with the private sector under the private finance initiative, which the Committee has examined. It is crucial that when the public sector engages with the private sector, the former is enabled to get the best deal through commercial negotiation. I look forward to a new era of secondment and switched experiences in which we can ensure that we get the best value for the taxpayer.
Several hon. Members have referred to privatisation, and I shall not dwell on the points that were made so well by my hon. Friends the Members for Tynemouth (Mr. Campbell) and for Shipley (Mr. Leslie). The issues considered by the Committee are not political; they relate to management and to getting the best deal for the public, but there is a grey area about when timing becomes policy.
As has been said, different people have different views on privatisation, but let us assume for a moment that we agree with a given privatisation. If that is so, we have to accept that timing is important in respect of value for money. If rolling stock suddenly has to be sold before a general election, as was the case, what happens to value for money for the taxpayer? There is a false sale, which means a lower price. The rolling stock cannot be sold in stages so the market cannot be tested, and, even more crucial, the people who thought that there might be a Labour Government—wise people knew that there would be—wonder what the commercial value of the privatised rolling stock of a formerly nationalised railway would be under a Labour Government.
Some people might think that a Labour Government would not want to encourage that, but because the previous Government were hastily pushing civil servants into the premature sell-off of railway stock, what happened, among other things, was that the price was deflated but later took off in a real market and was then exaggerated by the political changes. In the interests of the Government and the taxpayer, the sale should have


been delayed for the sake of value for money, instead of being pushed forward for ideological reasons. There is a similar story with the Ministry of Defence property, a scandal that has already been mentioned.
Public service agreements are measurable performance targets that the new Government have introduced and I shall focus on how they fit in with the activities of the NAO and the PAC. The old way of allocating Government expenditure was on a yearly basis. Every year, each Department would tell the Treasury that it wanted a certain amount of money because it had it last year and that it must have it again or there would be problems.
The new way—the third way, as it were—is for expenditure to be output-based. New money is allocated on the basis of what is to be done with it, whether what is to be done is measurable and what it will mean for the public. This involves a three-year planning phase—the comprehensive spending review—and alongside it we are to have resource accounting. It all adds up to a much more professional, strategic approach to the management of public funds.
Obviously, we have all heard about the extra £40 billion that will be spent on health and education, but the watchphrase is "investment for reform". That is what the public service agreements are about: 350 performance targets and 150 efficiency targets. We shall be able to see things coming which the PAC needs to review—for example, truancy needs to be down by one third in three years, car crime needs to be down by 30 per cent. in five years, and there needs to be 3 per cent. efficiency savings a year in the national health service.
Let us not pretend that there will not be debates over the priorities, whether there should be local variations and whether there needs to be a shift in priorities over time. However, the key point is to make it clear that we look for a return on investment in terms of the outputs that the public enjoy.
The right hon. Member for Haltemprice and Howden (Mr. Davis) mentioned in passing independent verification and scrutiny. I am sure that they will be instituted. My understanding of the current position is that they will be overseen by a Cabinet Committee, but clearly the NAO and the PAC are also well placed. The public service agreements will be linked to performance information, which will be part of the resource accounting regime. It is the view of the NAO, the PAC, the Treasury Select Committee and the Procedure Committee that the performance information in resource accounting should be independently validated, preferably by the NAO and the PAC. I hope that the Government will consider that.
Efficiency statements were announced at the same time as the public service agreements by the former Chief Secretary. I mention them especially in relation to fraud, procurement and absenteeism, which were the former Chief Secretary's focus in this instance, and to the work that the PAC has undertaken in the past year or so.
As has been said, the Committee recognised that there was some £900 million of housing benefit fraud, something like 8 per cent. of total spending. It concluded in its report not only that the Government needed to be fair and to ensure that the people who deserved housing benefit and were entitled to it in fact received it, but that they had a robust system to deter fraud.
Benefit interaction and confusion provided the opportunity for benefit fraud. In particular, the Department of Social Security and the Benefits Agency failed to control claims for income support and jobseeker's allowance—people applied for housing benefit at the same time, and the resulting gateway led to enormous benefit fraud. The problem is being tackled, and we should pay tribute to the work of the NAO and our Committee in bringing the problem to the fore. The Government welcomed what the Committee said.
The Government spend something like £20 billion on procurement. That is big money, and it is important that if we can make savings on Government purchases, we do so. In our report on the Ministry of Defence's stores management, we identified that for every £1 million of expenditure, between £30,000 and £100,000 could be saved or, to look at it another way, was lost because stores were not issued directly to the people using them. Again, that is being taken on.
As for NHS supplies, we examined the need for systematic analysis of price differences—the price of items being supplied other than to the NHS—in a bid to drive down supplier costs. Indeed, we are interested in the development of various new procurement techniques, be they linked to the PH, or be they procurement cards, the streamlined purchase of something like 1,750,000 low-value goods or electronic procurement.
As hon. Members will know, the target is that something like 90 per cent. of routine items should be electronically procured by March 2001, and a model is being devised for procurement excellence. There are also Ministry of Defence smart procurement initiatives and a joint departmental strategy. All these issues are key to the Government's value-for-money strategy and were examined by the NAO and the PAC.
Sickness absence is a problem that the Government need to tackle. The Committee did some work on the Metropolitan police service whose sickness average is 14.4 days a year. One day costs £6.3 million, and the implementation of some of our recommendations has already led to various savings.
We also did some work on the Child Support Agency. It is clear from what has been said that there are various problems. The basic message is that we need a simpler, standardised system, and that message has clearly been taken on board in the Government's recommendations.
In conclusion, the NAO and the PAC have been and will continue to be an enormous stimulus to Government success. The advent of public service agreements will bring a new stimulus in terms of value for money for the taxpayer. Alongside a revolution in information technology and a new accountability, we can look forward to ever higher standards of quality services for the public, tailored to the priorities of the people of Britain.

Mr. Geoffrey Clifton-Brown: I congratulate the hon. Lady the Member for Hornsey and Wood Green (Mrs. Roche) on her appointment as Financial Secretary. With the introduction of the euro, she takes over the job at a challenging time. I wish, her well in t hat task, because it will be vital for all of us that she gets it right. Like other members of the Public Accounts Committee, I pay tribute to the Comptroller and Auditor General, Sir John Bourn, for the excellent job that he does


in charge of the National Audit Office. As a member of the Public Accounts Commission, which sets the budget for the NAO, he is in charge of a lean and efficient organisation. He scrutinises every area of public expenditure extremely well.
I should also like to pay tribute to the Committee Clerk, Ken Brown, and his staff, who order our affairs with meticulous efficiency and distribute the paper work on time and in the correct order. Many hon. Members—[Interruption.] Sorry, I forgot to pay tribute to my Chairman for his outstanding efficiency and courtesy. I would have been struck off the Committee if I had not done so. Please, Mr. Chairman, call me early and allow me to speak at great length at the next Committee sitting.
Many hon. Members have referred to the Committee's effectiveness. The ideal would be for the Committee to have no work to do, because that would mean that there was no misappropriation of taxpayers' money. The Government would set their departmental spending priorities and each Department would draw up its budget and present the relevant motion to Parliament, which would approve it or not. Supplementary and excess votes would become an extreme rarity, and retrospective Treasury approval would be non-existent.
Perhaps there is some light at the end of the tunnel. We may be able to achieve something resembling that nirvana by the introduction of resource accounting, which will be introduced in 1999–2000, and will replace the current system of appropriation accounts. Perhaps I am being over-optimistic, but I believe that its introduction is the largest change in the delivery of our public services since the Committee was established more than a century and a half ago, so we should have high expectations of it.
Will the Financial Secretary give the House an idea of when the present system of appropriation accounts will be phased out? I note that the Treasury has not asked the PAC for approval to phase it out, so no date has been set. Will she tell the House what trigger points will have to be reached in the resource accounting process before it will be safe to phase out the existing system, which has been in place for so long?
I hope that the resource accounting system will enable Parliament to obtain financial transparency from and exercise far greater control over every Department of State. Other right hon. and hon. Members have referred to the Ministry of Defence—our 23rd report in 1996–97 shows that it overspent on class I votes 1, 2 and 3 by a staggering £234 million. When the Treasury was questioned by the Committee, I asked for a note on this matter. The MOD was fined £168 million, which came out of its budget for the subsequent year. The Secretary of State for Defence prepared a report, which went to the Chief Secretary. It is a very serious matter when a Department overspends its parliamentary voted money.
Permanent secretaries, who, as accounting officers, are involved in such excesses deserve to have their promotion prospects carefully examined. They should realise that their duty as accounting officers is paramount. The right hon. Baroness Thatcher, when she was Prime Minister in charge of the civil service, instructed her Cabinet Secretary to examine the effectiveness of permanent secretaries before they were promoted. We should return to that practice.
The 23rd report criticised the financial controls at the MOD. As the hon. Member for Liverpool, Garston (Maria Eagle) said, the costs on the Waltham Abbey Royal

Gunpowder Mills project escalated out of control by more than £10 million and retrospective Treasury approval was sought. That is an extremely rare occurrence—it has happened only three times since 1992. Some sanction should have been applied against the responsible MOD officials.
Worst of all, that report highlighted the fact that between 1988 and 1996, a staggering £50 billion was passed through uncontrolled suspense accounts. There were 2,705 suspense accounts, and £40 million had to be written off in 95 of them, including £19.5 million through the Army pay disbursement suspense account. The operation of such financial controls in a major Department of State are a disaster, and the accounting officers should be accountable for such gigantic errors.
I wonder whether the Financial Secretary can tell us whether the resource accounting shadow programme is on track. The programmes were supposed to be completed by 31 December 1998 so that a full shadow financial resource account could be produced by the end of the financial year on 1 April 1999. If the implementation of that process has slipped, for example in the Department of Social Security or the Ministry of Defence, which are the most likely candidates, it will be difficult to produce that first shadow resource account. I should be grateful if the Minister would give us some idea about that.
Other hon. Members have mentioned the fact that devolution will change the role of the PAC. That may be a good thing, but I am concerned that there should be no underlap or overlap between the current PAC functions and the functions that will be carried out in the future by the regional audit offices. We must watch that carefully. I am sure that my right hon. Friend the Member for Haltemprice and Howden (Mr. Davis), the Chairman of the PAC, would be only too pleased, if asked, to give help and advice about how the procedures could be carried out in those auditing bodies.
As has already been mentioned by right hon. and hon. Members, we have carried out some important regional surveys. For example, our 44th report points out the difficulties with the payment of disability allowance in Northern Ireland where as much as £17.8 million out of a total of £250 million, was incorrectly paid out in benefit. Such scams must be brought to the attention of the House and it is important that the Northern Ireland Grand Committee is properly able to examine such matters.
Other hon. Members have mentioned the 32nd report which says that 17 per cent. of NHS bodies in Scotland are not confident that they will be millennium compliant by 31 May 1999. My hon. Friend the Member for Bournemouth, East (Mr. Atkinson) spoke at length on millennium compliance. A total of £56 million will be required to put that problem right. I hope that I am not unlucky enough to be on a life support machine in a Scottish hospital on 31 December this year or, if I am, I hope that it will continue to function.
The 32nd report also deals with cataract surgery, which is a quality-of-life issue. If a cataract operation is not carried out in a timely manner it is possible to go blind. Our report found that of the completion target of 80 per cent. for day cases, only 43 per cent. was achieved. That is a staggering shortfall that should have been rectified much earlier. As a result, the NHS was unable to benefit from various savings of £1.5 million.
Although the bulk of the PAC's work is about ensuring value for money, rooting out fraud is just as important. After examining some of the latest figures today, I have a robust figure for fraud in the Department of Social Security of at least £4 billion. That is a staggering figure. Time after time in Treasury debates in the House the Government chide the Opposition and ask them to say where savings can be made when we say that their budget is unsustainable. The Financial Secretary should look at that figure of £4 billion in fraud. I shall break it down for her so that there is no doubt that it is robust.
In the Benefits Agency, the figure for fraud is reckoned to be about £2.3 billion. In housing benefit, the figure for fraud is reckoned to be £900 million although, in our later report this year, that may be coming down, and I welcome that. Gross errors in income support—that is overpayments less underpayments—account for £424 million and those relating to the jobseeker's allowance account for £167 million. That makes a total of almost £4 billion.
There are some fairly elementary things that could be done quite quickly to reduce that figure. For example, it is estimated that the loss to the national insurance fund account arising from the fraudulent encashment of giro cheques and other order books may be as high as £64 million and is certainly confirmed at £13.2 million. It would be a fairly simple process to have a system of bar codes so that we could be certain that the person cashing the giro cheque is the person entitled to do so.
I pay tribute to the National Audit Office, which last week, for the 12th year running, has qualified the Benefit Agency's accounts, and, for the 10th year running, has qualified the national insurance fund's accounts. It is a very serious matter when accounts have been qualified for such a long time. If I were one of the accounting officers at the Department of Social Security, I would be pretty ashamed of that record.
Hon. Members have already mentioned the NIRS2 computer system, which was dealt with also in the Committee's 46th report, which was produced on 1 July 1998. The NIRS2 is one of the Government's largest computer systems and should be supporting the Contributions Agency in its endeavours to make payments to pensioners. However, even today, six years after the tender was let, the agency is still having to pay out compensation to those who did not receive proper payments into their pension funds. That is an utter disgrace. The Department of Social Security should have got on top of the matter far more quickly than it did. In February, the matter will be brought before the Committee. I hope that, in line with the request of my hon. Friend the Member for South-West Hertfordshire (Mr. Page), we ask for Andersen Consulting to send a senior, answerable partner to tell us why the system has been so delayed.
We should very seriously examine fraud in the Department of Social Security. Time after time—probably four times since 1990—the problem has come before the Committee. We must devise mechanisms to ensure that real and positive action is taken when such matters are dealt with by the Committee.
My right hon. Friend the Member for Haltemprice and Howden has already mentioned the National Audit Office's other remits. When the Public Accounts

Commission set the National Audit Office's budget, the Comptroller and Auditor General made it quite clear to us that he was completely dissatisfied with the fact that the European Court of Auditors, based in Brussels, has greater access to non-departmental government bodies and executive agencies than our own National Audit Office. The Government should rectify that anomaly forthwith.
The standard of our NAO is considerably higher than that of the European Court of Auditors. In our 35th report, which hon. Members have already mentioned, we state that fraud in the Community is a serious matter. I am not surprised that, today, the matter has been subject to a vote in the European Parliament. Paragraph 5 of our 35th report states:
We are disappointed to find that standards of financial management and accounting across the Community are still too low; and that there is evidence of waste, error and fraud in the Community's expenditure programmes.
It continues:
we endorse the Comptroller and Auditor General's conclusion that the Commission have some way to go before they attain the quality of financial reporting expected of public sector financial statements, such as government accounts in the United Kingdom".
When our NAO has been so damning about the European Court of Auditors, the latter should consider how the former conducts its work and try to adopt some best practice.
As I am dealing with our 35th report, it is worth highlighting the four major areas in which the European Community is falling short—the very subject of today's vote in the European Parliament. First, the report states that agricultural compensation schemes do not take into account movements in world prices. It is fairly elementary that they should do so. The second problem is the media's oft-quoted example of high tobacco subsidies that have absolutely no effect on improving tobacco quality. The third problem is that the recovery of customs duties are not always collected properly. The final matter, and perhaps financially most important, is the high error level in the payment of structural funds. My right hon. Friend the Member for Haltemprice and Howden has said that total errors amount to £3.5 billion per year. As we are the third largest net contributor, at £1.7 billion, the issue directly affects Parliament and the, taxpayers of this country.
We should be very concerned about such matters in Europe. Will the Financial Secretary tell us what action the Government took to rectify the problems when they held the presidency last year? What follow-up has there been? If we are to renegotiate our financial arrangements with the European Commission and our Fontainebleau rebate is to be reduced, the continuing financial irregularities will be of even greater concern to us.
The work of the NAO is of the highest quality, ensuring savings of more than seven times its running costs. It performs a great service to the House and the nation in monitoring the financial probity of the uses to which taxpayers' money is put, but it has less access to UK institutions than the Brussels-based European Court of Auditors. That is an anomaly. I hope that the Financial Secretary will say something about it. If not, I hope that my right hon. Friend the Chairman of the Public Accounts Committee and the Chairman of the Public Accounts Commission will pursue the matter vigorously with the Chancellor until we have a solution.
It is a privilege to be a member of the Public Accounts Committee, which does an effective job in monitoring the NAO's work. I commend its work to the House.

Mr. Barry Gardiner: Mr. Deputy Speaker, imagine that you are a shareholder in a large national corporation. You do not normally pay close attention to the company's dealings, but you read the annual report, which has just arrived on your doorstep. As you read it over your morning orange juice, you find that the company has divested itself of an arm of what it calls its non-core business. At first you nod with approval as you read that the sale realised £12 million for the corporation, but as you turn to the appendix you become puzzled. You discover that for the division of the company to be sold, it had to be restructured. That restructuring cost £2.2 million. You check the appendix once more to find that the sale also had costs amounting to £3.1 million. The sale price of £12 million has cost £5.3 million to realise, so the real price that the company received was only £6.7 million—or was it?
You look at the fixed assets in the accounts to find that assets valued at £5 million were transferred with the sale. The price that your company has received seems to have diminished to £1.7 million from that original £12 million—at least it would have been £1.7 million but for the guarantees. Your company gave 63 guarantees to the purchaser regarding levels of work and income. Because the work in one or two areas was less than forecast—although overall work was considerably greater—your company had to pay compensation to the purchaser totalling £1.542 million.
Your mental arithmetic is in overdrive as you calculate that the original purchase price of £12 million now looks more like just £158,000. Well, it would look like that if the final sale price had been £12 million. In fact, because of a post-sale adjustment in the value of the transferred assets, a further £600,000 was clawed back off the original sale price by the purchaser. Your company appears to have paid—not been paid—£442,000 to divest itself of that part of its business.
Perhaps you console yourself with the thought that it must have been a loss-making part of the company—a non-profitable division that the company is better off without. If that were the case, it is hard to see why, because your company has guaranteed it an income of £111 million over the next six years. Few businesses get a better start-up. On reading that annual report, would you not determine to get rid of your shares in that dreadfully managed company as quickly as possible?
I regret to inform you, Mr. Deputy Speaker, that this is not some fanciful thought experiment. You were a shareholder in that company and so were the rest of the British public. The company was Great Britain plc under the previous Government and the sale was that of the facilities services division of the Atomic Energy Authority in March 1995.
I am delighted to say that the shareholders expressed their view of the board's incompetence at a quinquennial meeting held on 1 May 1997 and the company is under new—perhaps I should say new Labour—management.
The Public Accounts Committee has done Parliament a great service by its thorough investigation into Atomic Energy Authority privatisations, first of its facilities

services division and subsequently in September 1996 of AEA Technology. In the sale of AEA Technology, the Department of Trade and Industry received a gross sum of £227.75 million following a flotation valuing the shares at £2.80 each. After deducting the costs of restructuring at £121 million and the £8.1 million paid to the Government's so-called advisers, the sale achieved a net figure to the Treasury of just £98.65 million. How strange then that on the very day of the sale, the markets placed a £34.8 million premium on the offer price. Within 20 months, the share price had almost tripled, valuing the company at more than £622 million. The taxpayer had netted just £98 million.
When the Public Accounts Committee asked the DTI to explain why AEA Technology so spectacularly outperformed the FT support services index in the month after the sale, the response was that although it no longer had responsibility for the company post-privatisation, the Department believed that the new management had been
assiduous in talking to their shareholders and explaining to them their plans as they gradually began to develop.
So it was a matter of spin. If assiduous talking can push a company's performance 30 per cent. higher than the FT index for the sector, Charlie Whelan should leave the BBC and come on down to the City because there will always be a job for him there.
It is vital that the mistakes of the past are not reproduced in future privatisations. The PAC reports are littered with references to previous advice which has been ignored, with Departments blindly trying to reinvent the wheel and protecting their own dignity rather than requesting advice from other Departments that have broader experience and have learned from past mistakes. If there were ever a case for collegiality and joined-up government, it is here, in the custodianship and disposal of public assets.
I shall briefly set out the lessons that I hope will never have to be relearned about the process of privatisation and how the Government can maximise returns and ensure value for money for the British taxpayer.
The beginning of the privatisation process is marked by pre-sale restructuring. It is unacceptable for Departments to seek to inflate net sale proceeds by ignoring restructuring costs related to that sale. If restructuring is carried out, it should not bring benefits to the private purchaser without realising commensurate returns for the public.
I have mentioned the £121 million restructuring of AEA Technology. It can be argued that without such a restructuring, the business would have been unsaleable. However, I believe—this is not a recommendation in the 61st report—that after any restructuring, the Government should also consider afresh whether more value may now be achieved by retaining the asset post-restructure, rather than by selling it. Pre-sale restructuring should take place if it will enhance proceeds for the taxpayer. However, on no account should the Government seek to inflate proceeds to the Department by ignoring the restructuring costs when calculating net returns—as has been done in the past.
I wish to refer to, the objectives of the sale. Departments should ensure that such objectives are carefully set prior to the privatisation process. In the sale of Scottish Power and Scottish Hydro-Electric, no benchmark or target ranges were identified either as to the number of


shareholders or, indeed, the length of time that those shares were to be held by those shareholders. Yet only by quantifying those in advance would it have been possible to have analysed whether the much-vaunted objective of increasing individual share ownership had been achieved.
On benchmarking, the process of considering how a business is valued gives the Government some grasp of the potential worth of the enterprise and can act as a guide to whether the terms of the sale are likely to achieve full value for the taxpayer. In August 1988, the Rover group was sold to British Aerospace. Before entering into negotiations, the Government had not undertaken a comprehensive valuation of the company. Benchmarking is an essential tool of privatisation. Only a fool—or, perhaps, a Conservative Minister—attempts to sell something without having any idea of its value.
Book-building can be a useful tool in acquiring that knowledge, where brokers seek indications of demand at a range of prices to see where that demand begins to fall away. In book-building, it is vital that the range is not focused too narrowly, lest a similar result to that of AEA Technology occurs—where the sale price of £2.80 was the top of the range which was canvassed in the book-building process, and no significant tapering occurred during that process. That led to the gross undervaluing of the company and the corresponding loss to the taxpayer.
Departments should always consider retaining a proportion of the shares because that enables the Government to extract the maximum value for the taxpayer from post-sale enhancements in value. It is noted by the PAC in the 61st report that in the privatisation of the 12 regional electricity companies, not only were no benchmarks used, but, because no shares were retained, the public did not benefit by the rapid escalation of the share price which occurred shortly after the sale. By contrast, the successful phasing of the sale of British Aerospace, Associated British Ports, National Power and PowerGen enabled the taxpayer to benefit from additional proceeds of £2.3 billion. That shows how critical phasing can be.
The timing of privatisations is also critical. Privatisations which are offered too close to each other—like Railtrack and British Energy—can lead investors to regard the two as just one investment opportunity, thereby reducing the revenue gained.
On the role of external auditors and their appointment, it is vital that the appointment of advisers should be transparent and by competitive tender. The financial and legal advisers for the award of the first three passenger rail franchises were appointed by the Office of Passenger Rail Franchising without competition. Their fees accounted for nearly £19 million.
Competition not only lowers cost; it ensures propriety in the appointment process. When completion and success fees are agreed with advisers, it is ridiculous to rely on valuations made by the potential beneficiary of the success fee. Independent valuations must be obtained, and the performance criteria should be defined at the start of the' process as far as possible.
Schroders' £1.99 million success fee for the sale of AEA Technology was based on its own valuation of AEA, which was not independently validated. The success fee

paid to N. M. Rothschild and Son Ltd. was not formally agreed until two of the stages used as the basis for determining success had already been completed. That is not just to set one's own target and fix one's own reward; it is to place one's arrows in the bull's-eye before the game has even begun. Any criteria for success fees must be set out, preferably before the appointment of advisers, and based on independent reference points.
My hon. Friend the Member for Shipley (Mr. Leslie) mentioned clawback. After the sale of the rolling stock leasing companies, all were resold within two years, with the profits that my hon. Friend mentioned. The Government, however, were aware that the timing of the sale might not be conducive to the achievement of best value for the taxpayer. A clawback provision relating to gains from further on-sales would have protected the taxpayer's interest, but no such provision was introduced. That should have happened. If a clawback provision had been inserted in the sale agreement for the 12 regional electricity companies, the public would have received their rightful share of the £214 million of excess pre-tax profits beyond the forecast profits used in agreeing the sale. In future sales, clawback should always be considered.
The United Kingdom has built up an enormous pool of experience relating to privatisation. There are many things that the Treasury has pioneered, and has got right. The use of partly paid offer structures is an excellent example. Investors have proved ready to pay a premium for partly paid shares, with minimal problems from non-payment of the second instalment. Sadly, much of Britain's experience has come in a bitter form, through the failures and mistakes so assiduously documented by the Public Accounts Committee. I pay tribute to the work that the Committee has done.
I join others in welcoming my hon. Friend the Financial Secretary to her post. I also welcome the recent interchange between the Department of Trade and Industry and the Treasury. I believe that it will enhance the willingness of the two Departments to work constructively together. The mistakes of the past must not be repeated: that is the message that the House must send to Government, throughout Whitehall, on the basis of the PAC reports.

Mr. David Rendel: I wish to concentrate on the 46th report, on the replacement of the national insurance recording system, something that, as the report clearly demonstrates, has been a comprehensive shambles.
The report, published on 10 June last year, refers to a system, the original contract for which was to cost about £134 million. We are not talking peanuts; we are talking about big sums, even in Government terms, and the fact that a large part of that money has been comprehensively wasted because the programme has been so late is a serious matter that we should all consider. As the Chairman of the Committee made clear, when the report came out, it seemed that there had been many problems, but, as far as the report showed, most of those, apparently, were resolved and the programme was due to come into operation. On July 13, it became clear via newspaper reports that the whole system had, apparently, gone live.
It was not until about the middle of September that it began to be clear that, far from the problems being all over and done with, there were still serious problems with


the new system, that it could not yet make the calculations—all the records were not there and ready to be used for calculations of new benefit claims—and that, in effect, all contributions-based benefit claims, plus linked housing benefit and council tax benefit claims, were being paid blind. It was not until 4 November, when we had the written answer to a written question to the Secretary of State for Social Security that I tabled and that was referred to by the Chairman, that it became clear how many problems there still were with the system.
The Chairman was, rightly, a bit angry that the Government had not come clean earlier and admitted that there were still many problems with the system. I accept that he is right to be angry, but I was a bit surprised that the Government did not come clean earlier as the major share of the blame for the failure of NIRS2 has to lie, not with the current Government, but with the previous Government, who originally arranged the contract, and then failed to look into it carefully enough and to realise that it was totally inadequate and that the programme as originally envisaged was not going to meet the needs.
The Government made the situation even worse by failing to admit openly at an early stage what the problems were, but the problems were not down to them originally. That would have made it easier perhaps—it should have made it easier; I am surprised that it did not—for them to be open about what problems still existed.
That written answer still left several questions. I should welcome the Minister giving some answers in her winding-up speech, if she can, to the questions that I intend to put. Clearly, there is still a major backlog of benefit claims that have not been properly processed through the computer because the programme is not yet able to do that. That backlog has to be cleared, even though a number of people have been paid benefits on the basis of manual calculations—the best that the various agencies can do is to work out roughly what the benefit claims should be.
Even though manual calculations are being done, all those claims will have to be re-checked once the computer system is up and running, so the first question is: how quickly is that backlog going to be cleared? What extra resources are the Government going to put into the clearing of that backlog and what are the costs of those resources? Clearly, that is an extra cost to the taxpayer, unless it can be reclaimed from Andersen Consulting, the contractors.
Secondly, personal pension providers have worries because they, too, have suffered as a result of the inadequacies of the programme and the fact that it has been so delayed. What compensation does the Minister expect to have to pay to personal pension providers as a result of the programme's failures?
Thirdly, do the Government foresee any additional compensation being paid by Andersen Consulting? Will the Contributions Agency seek any extra compensation? The report makes it plain that, apart from the compensation that has already been won from Andersen Consulting—some £3 million—there is a lot of lost savings due to the late implementation of the programme. Will the Government be adequately compensated for the lost savings as a result of the long delays?
Perhaps the most important question of all is: what will happen to the individuals who suffered as a result of the failure of the whole project? The answer that I received said that compensation would be considered for the individuals concerned within the normal rules of the departmental special payments scheme. I do not suppose that many of the people involved know what those rules are. I am not familiar with the full set of rules, and I do not know whether the Minister is. However, it would be interesting to know, for example, whether there will be any compensation for those who have had to pay extra costs just to fight their cases.
I took part in a local radio programme earlier this week dealing with telephone calls from people who had suffered as a result of the project's failure. Many callers complained about the number of letters that they had had to write and telephone calls that they had had to make to obtain a manual calculation of their benefits, given that those calculations could not be done by computer.
It seems unfair that those extra costs should be borne by people who by definition—because otherwise they would not be claiming the benefits involved—are among the poorest in society. They include new pensioners who may have to rely entirely on the state retirement pension, and who are therefore among the poorest of all our citizens. It is not fair that they should have to bear the cost of fighting for benefits that should have been paid automatically as a result of a computer calculation.
Hon. Members earn in the region of £40,000 a year and some of us may regard as comparatively small the amounts of money that are not being paid after the manual calculation has been performed. Those sums may be as little as £1.25 a week, but they are not insignificant for a person on a retirement pension of only a few tens of pounds. If the rules contain a threshold governing when compensation may be paid, it is possible that some of the amounts involved may be below that level. If so, I should be very sorry if, because of the project's failure, people were to lose out for ever on benefits to which they were entitled.
Will the Minister say what will happen in those rare but sad cases in which people die before the backlog is cleared and their payments are properly calculated? Given that many of the people involved are old age pensioners, such cases must exist. Will the relevant payments be made into those people's estates, or will the money simply be lost altogether?
It is not the fault of this Government that the contract was so badly managed, but people who have lost out deserve full compensation from the state, regardless of which Government are in charge. That compensation should take account of the back payments: it should also include a real allowance to cover the interest incurred in the cash flow costs that they have suffered and the extra costs involved in fighting for benefits that should have been paid automatically.
Finally, we need to learn the lessons from the fiasco of a project that has gone badly wrong. I was delighted to hear the hon. Member for Cotswold (Mr. Clifton-Brown), who unfortunately has left the Chamber, say that the matter will be brought back before the Public Accounts Committee. However, I believe that we need a full independent inquiry into how and why such a totally inadequate contract came to be let to Andersen Consulting. Such an inquiry should also determine why


the Government have recovered so little in compensation payments when the project went so badly wrong. It is one for thing for such a project to go wrong; it would be much worse if we did not learn the lesson and get it right next time.

Mr. Nick Gibb: First, I congratulate the Financial Secretary to the Treasury, the hon. Member for Hornsey and Wood Green (Mrs. Roche), on her appointment. I hope that her career at the Treasury will be as successful as her predecessor's seems to have been.
I also pay tribute to my right hon. Friend the Member for Haltemprice and Howden (Mr. Davis), and to all the members of the Public Accounts Committee, for their work over the past 18 months: 67 reports in that period is a prolific output and a heavy work load.
The Committee's work and the investigations by the National Audit Office are crucial in helping all hon. Members to carry out one of our primary duties, which is to scrutinise the Executive. Bearing in mind what has happened in Europe, I hope that my right hon. Friend the Member for Haltemprice and Howden will never find himself suspended and on half pay as a result of blowing the whistle on waste and fraud and reporting such matters to Parliament.
In November 1997, my right hon. Friend summarised the role of the PAC in a typically pithy phrase:
we in the PAC look for good practice to encourage and disseminate, bad practice to discourage and eliminate and improper practice to condemn and punish. In short…the good, the bad and the ugly."—[Official Report, 20 November 1997; Vol. 301, c. 476]
The PAC and the National Audit Office concentrate on the bad, but scattered throughout the reports are nuggets of interesting and revealing good news about our public services. For example, the 32nd report on cataract surgery in Scotland points out that the number of operations to remove cataracts carried out there increased from 10,000 a year in 1992 to about 16,000 a year by 1997.
The 61st report on getting value for money in privatisations points out that, for nearly 20 years, the United Kingdom has led the world in the privatisation of state-owned businesses. The report could also have pointed out, but did not, that, as a result of the privatisation programme, state industries that once cost the Exchequer £50 million a week now contribute to it £65 million a week in corporation tax revenues.
The 28th PAC report on the Charity Commission points out that Britain has 184,000 registered charities, with an annual total income of £16 billion and assets of about £35 billion, which must be a good news story.
As we have heard, the 36th report on the water industry in England and Wales points out that, since privatisation, the quality of service has improved in a number of respects. It also highlights the fact that the privatised water companies are investing around £3 billion a year compared with £1.75 billion a year when they were state owned. The 59th report on the coastguard points out that, in 1995, it dealt with more 12,000 incidents in the UK search-and-rescue region.
One could find many more such examples, but the key role of the NAO is to find fault and there is plenty of fault to find, as we heard from the hon. Member for Brent, North (Mr. Gardiner). The hon. Members for Ross, Skye and Inverness, West (Mr. Kennedy) and for Galloway and Upper Nithsdale (Mr. Morgan) highlighted their and the PAC's concern about the Skye bridge project.
The hon. Member for Liverpool, Garston (Maria Eagle), in a thoughtful and interesting contribution on the nature of government and the ethos of the permanent Executive, used the Ministry of Defence to illustrate how Whitehall is not always as responsive as it ought to be to PAC reports and their conclusions.
Reflecting a continuing theme of the debate, my hon. Friend the Member for South-West Hertfordshire (Mr. Page) expressed his concern over the NAO's role following devolution and the problems that that may cause in terms of access. He made the important point that individual accounting officers, whether or not they are still in post, should be answerable to the Committee—a similar point to that made by the hon. Member for Croydon, Central (Mr. Davies) about permanent secretaries.
The hon. Member for Reading, East (Jane Griffiths) was slightly more optimistic about the PAC's advice being adopted, citing its 61st report on privatisation as an example. She praised the Social Security Administration (Fraud) Act 1997 as an effective first step in tackling social security and housing benefit fraud.
My hon. Friend the Member for Bexhill and Battle (Mr. Wardle) emphasised, as have others members of the PAC in this debate, the need for the Comptroller and Auditor General to be given access to non-departmental bodies and even into private sector companies that have contractual relationships with the state. He emphasised the fundamental importance of the PAC's work in exposing the complete shambles in the European Commission.
The hon. Member for Shipley (Mr. Leslie) is the only person I know who is pleased to receive his income tax bill, which I find slightly odd, so I will move straight on to my hon. Friend the Member for Bournemouth, East (Mr. Atkinson), who raised the important issue of the millennium bug, which was the subject of the PAC's 66th report.
In a slightly more partisan speech than was otherwise heard in the debate, the hon. Member for Tynemouth (Mr. Campbell) said that market conditions were being blamed for the sale of the rolling stock leasing companies. He failed to mention that market conditions were severely affected by the statements of the right hon. Member for Birmingham, Ladywood (Clare Short) when she was Labour's principal spokesman on transport.
My hon. Friend the Member for Cotswold (Mr. Clifton-Brown), in a moving speech on resource accounting, highlighted the lack of accounting controls in the Ministry of Defence. He also mentioned fraud, both in the Department of Social Security and the European Union and made the important point that the National Audit Office does not have the same access powers as the European Court of Auditors.
The 46th report, on the contract to develop and update the national insurance recording system, or NIRS, caused concern and was mentioned by several hon. Members. The measured but critical conclusions of the Public Accounts Committee report foresaw the impending


disaster that struck the computer system only three months after its publication, despite the fact that not all the requested information was given. It stated:
We are very concerned that the implementation of the new system is already nearly 18 months behind the date agreed…the Agency face an immense task catching up with their operations".
As the hon. Member for Newbury (Mr. Rendel) pointed out, last September the time came to transfer some 65 million records from NIRS1 to NIRS2, the biggest and most complex information technology project in Europe. The system collapsed. Thousands of records were wiped out, causing chaos in benefit offices and, undoubtedly, cases of hardship. Many newly retired pensioners have been paid pensions that ignore later year contributions. As my right hon. Friend the Member for Haltemprice and Howden informed the House, this will be the subject of a future NAO and PAC report. The many lessons to be drawn about how to structure and manage such a colossal project are well documented in the 46th report, which will provide useful guidance for similar private finance initiative projects.
The 27th report, on measures to combat housing benefit fraud, reveals a catalogue of unacceptable complacency and waste. Some 4.5 million people receive housing benefit, costing £11.5 billion a year, of which some £1 billion to £2 billion is lost through fraud. That figure is unacceptably high. The PAC is right to conclude:
The waste of public money on Housing Benefit fraud is massive and inexcusable, and it has gone on for far too long.
Much has been done in recent years to crack down on benefit fraud. The fraud hotline and all the spend-to-save initiatives are successful examples. Such initiatives must continue. Paragraph 7 states:
Investment in anti-fraud work can be very cost effective".
That is true. The southern command team of the Benefits Agency Security Investigation Service, or BASIS, was so successful in the first sixth months of the year that its £2 million budget has been spent. Since September 1998, the BASIS teams have been standing idle. That is accounting madness; penny wise, pound foolish, as my grandmother would say. It is important that the Government continue to demonstrate that they are serious about tackling fraud and properly resource the spend-to-save initiatives.
The report also makes important observations about prosecuting those caught defrauding the system. It states:
Fear of detection can be an effective deterrent against committing fraud, but only if it is backed up sufficient prosecutions and effective penalties.
However, the level of prosecutions by local authorities is incredibly low, at less than 1 per cent. of detected frauds.
On a Social Security Committee visit to the Benefits Agency a year ago, I asked a senior official about prosecutions. His response was that being caught was the deterrent and that prosecutions were therefore an unnecessary expense. I believe that that is wrong. If the only downside to putting in a fraudulent benefit claim is having perhaps to repay it one day, there is nothing to lose in putting in such a claim. That does not provide an effective deterrent. As the hon. Member for Reading, East said, the lack of prosecutions is an open invitation to fraudsters to help themselves to the pot of gold. Criminal prosecutions followed by the possibility of gaol is a deterrent. Local authorities and the DSS should, in the view of Conservative Members and of the PAC, prosecute far more often.
Despite repeated PAC criticisms over many years, it seems that the DSS is not adequately dealing with the issue. Last week, for the 10th successive year, the Benefits Agency had its accounts qualified by the National Audit Office because of fraud. Yesterday, the NAO qualified the accounts of the national insurance fund because of fraud.
Social security fraud pales compared with fraud in the European Commission. The 35th report examined the European Court of Auditors for 1996 and concluded:

We are disappointed to find that standards of financial management and accounting across the Community are still too low; and that there is evidence of waste, error and fraud".
It is estimated that £6 billion is lost through fraud from the total EU budget of £65 billion. That is 10 per cent. Fake contracts, non-existent building projects and a culture of jobs for the boys or jobs for one's dentist seem to be rife in the European Commission. EU fraud is a black hole into which billions of pounds of taxpayers' money is pouring. Neither the European Commission nor, I am afraid to say, the British Government, are doing enough about it.
According to Paul Van Buitenen, the Dutch auditor who was rewarded for his disclosures by suspension on half pay, a number of EU Commissioners were themselves involved in irregularities. Even more worrying is the claim by Bernhard Friedmann, the German president of the European Court of Auditors, that his investigations had been hindered in every way and that the Commission had told him untruths.
My hon. Friend the Member for South-West Hertfordshire made a telling point when he said in last year's PAC debate that the National Audit Office should extend its work into examination of European financial affairs. He said:
I suspect that the NAO might be slightly more rigorous than some other bodies in tracing where the money goes, finding out how it is spent and ensuring that we get value for money."—[Official Report, 20 November 1997; Vol. 301, c. 489.]
Subsequent events have proved that something is needed to deal with the problem of EU fraud.
In last year's debate, the then Financial Secretary, now the Paymaster General, said that the NAO had been invited to audit the assumptions underlying the forecasts of public finances. The Chancellor, the Financial Secretary and other Treasury Ministers have made much of that as an important step in openness. However, the Opposition fear that that innovation has not been properly implemented, and that the good offices of the CAG have been used simply to serve the Government's political purpose.
I cite as an example the CAG's first report in June 1997 on the Government's assumptions on unemployment. He said:
As a level assumption for claimant unemployment, the figure of 1.65 million would seem consistent with the available independent assessment of unemployment prospects.
In other words, 1.65 million was a reasonable assumption for a flat unemployment level for the years covered by the Red Book. However, in subsequent government documents, that figure was reduced. In the November 1998 pre-Budget report, a figure of 1.3 million unemployed was used as the assumption on which the public finances were based.
The NAO was not asked by the Government to audit any of the changed figures. If the Government wish the figures that they use in documents to be audited by the


NAO, that must be done consistently or not at all. Otherwise, all that the Government are doing is abusing the office of the CAG, something that the Opposition would condemn.
As my right hon. Friend the Member for Haltemprice and Howden has said, the integrity of measures of public performance needs to be iron-clad. So, instead of asking the NAO to provide them with political cover, the Government would be better advised to ask it to audit the value for money of some of their flagship schemes such as the new deal, which the Opposition feel represents poor value for money for taxpayers.
This has been an important debate on the vital work of the NAO and the PAC. As my hon. Friend the Member for Daventry (Mr. Boswell) said during a previous PAC debate, for corruption or waste in the public finances,
sunlight is the best disinfectant".—[Official Report, 20 November 1997: Vol. 301, c. 517]
The PAC has done a great deal to shed light on such issues. We look forward to the Financial Secretary's telling us about the Government's proposals to strengthen further the role of the NAO and the PAC in their work as guardians of the taxpayer's money.

The Financial Secretary to the Treasury (Mrs. Barbara Roche): I thank most warmly all the right hon. and hon. Members who have participated for the high standard of the debate. This is my first appearance at the Dispatch Box in my new role as Financial Secretary to the Treasury and I thank most heartily all the hon. Members who have welcomed me; I cannot think of a more important debate on which to make my first appearance in my new role. My officials and my predecessor told me about the high standard of work, the dedication and the all-party approach that these vital issues command, and I am delighted that their comments have been vindicated by today's debate.
I thank the Public Accounts Committee for all its hard work over the past year. By any standard, the Committee has had an exceptionally busy year, producing 67 reports, which must be close to a record. A feature of all those reports is the thoroughness with which the members of the Committee have tackled the subject and the fact that, quite rightly, the reports are hard hitting. Much has been made this afternoon of the historic role of the PAC and the fact that it exists to hold the Executive to account, to carry out the most important part of Parliament's scrutinising role by ensuring that taxpayers' money is spent properly and wisely, and to ensure that Ministers and officials account for that money properly.
The Committee must be congratulated on the way in which it has highlighted waste, inefficiency and fraud, as well as identifying and promoting good practice. The Opposition spokesman, the hon. Member for Bognor Regis and Littlehampton (Mr. Gibb), whom I thank for his kind words, made a good point when he emphasised good practice. The reports contain outstanding examples of good practice, and both the Government and the Committee want that to be promulgated throughout Whitehall.
One of the reasons why the Committee has been so productive is the chairmanship of the right hon. Member for Haltemprice and Howden (Mr. Davis). Both the House

and the country are well served by his hard work. We should also be grateful to the new members of the Committee and to those who have done sterling work over many years, including my right hon. Friend the Member for Swansea, West (Mr. Williams), and the right hon. Member for Caithness, Sutherland and Easter Ross (Mr. Maclennan), who cannot be with us today. It is a particular pleasure for me to serve in this area with the hon. Member for South-West Hertfordshire (Mr. Page), who was my immediate predecessor at the Department of Trade and Industry. I also thank the hon. Member for Bexhill and Battle (Mr. Wardle), who has continued to serve as a member of the Committee in the new Parliament.
Our thanks must also go to the National Audit Office and the Northern Ireland Audit Office and their respective Comptrollers and Auditors General for all their work. Good-quality auditing is essential to provide an assurance that public money has been well and properly spent. The task facing all those bodies is enormous and no one should underestimate it. We are lucky to have organisations of such calibre, which carry out their work so effectively.
No fewer than eight of the Committee's reports deal with privatisation and all make important and valuable points. The hearing on the sale of the rolling stock companies was one of the most memorable, as the Committee heard how a small number of former British Rail managers had made huge windfall gains of between £15 million and £33 million through their investment in those companies. That issue was dealt with by my hon. Friends the Members for Shipley (Mr. Leslie) and for Tynemouth (Mr. Campbell). The Committee was absolutely right to draw attention to those excesses. Gains like that risk discrediting privatisation as a whole, and, in future sales, we will need to put in place mechanisms designed to prevent any recurrence.
The Committee's 61st report, "Getting Value for Money in Privatisations", sets out lessons derived from all the Committee's reports on privatisation. My hon. Friends the Members for Shipley, for Brent, North (Mr. Gardiner) and for Reading, East (Jane Griffiths) pointed out correctly that lessons must be learned. We agree that the lessons set out in this valuable report should be taken into account by Departments. However, it is important that Departments be allowed to exercise judgment in seeking the best possible deal for the taxpayer, rather than slavishly following a detailed set of rules. I assure all hon. Members that those lessons will be widely disseminated, and I shall ensure that they are learned by all Departments. That is absolutely essential as far as the Treasury's role is concerned: we must ensure that this guidance is recognised centrally and reflected in all Departments.
There has also been discussion of other areas. The hon. Member for Newbury (Mr. Rendel) referred to the 46th report, "The Contract to Develop and Update the Replacement National Insurance Recording System". As he will be aware, that system contains 65 million accounts, and there were bound to be major challenges in changing to a new computer system of that size. However, in all honesty, I must admit that it is disappointing that delays have occurred in relation to retirement pensions and widows benefit, for example. The hon. Gentleman highlighted very well what that means to the people who value and gain from that service. He was right to point out the consequences for those individuals.
I assure the hon. Gentleman and the House that every effort is made to minimise the impact on clients. In most cases, any delays have been overcome by using contingency measures. I also reassure the hon. Gentleman that no records were destroyed during the development and conversion or as a result of live processing.
The hon. Gentleman raised several other points. The contractor, Andersen Consulting, has had to bear the associated costs of the revised implementation plan. In addition, Andersen's has had to pay £3.7 million in compensation to date. The hon. Gentleman also raised some wider points regarding social security issues, and I shall undertake to ensure that he receives a satisfactory reply to all those questions.
Turning to wider issues, I am delighted to inform the House that excellent progress continues to be made on public and private partnership projects, including private finance projects. I shall bring the House up to date on a few developments. Since May 1997, we have signed projects with an aggregate capital value of £4 billion—which, incidentally, compares with approximately £7 billion in the five years before then. Hospitals and schools and other vital public services across the country will benefit.
There was a discussion about the Skye bridge to which the hon. Members for Ross, Skye and Inverness, West (Mr. Kennedy) and for Galloway and Upper Nithsdale (Mr. Morgan) contributed. I assure them that we are aware of their keen interest in this subject and understand the sensitivities of tolling in this case. It is important to remember that tolls have always been lower than the equivalent ferry fares, but as the hon. Gentlemen would acknowledge, the Government acted quickly to reduce tolls for regular users.
I am absolutely confident that my right hon. Friend the Secretary of State for Scotland has thoroughly considered the many points put to him by the hon. Gentlemen. I understand that the courts in Scotland have also considered various issues relating to procurement for the bridge. The Government welcome the Public Accounts Committee's recognition of the important role that public-private partnerships can play in delivering public services. I can tell the hon. Gentlemen that the lessons from the Skye bridge project have already informed best practice guidance for subsequent projects.
The hon. Member for Ross, Skye and Inverness, West put several detailed points to me. I assure him that the Government will respond to those in full.
Many of the reports produced by the Committee during the past year focus on the need to improve value for money in the provision of public services. Two such reports are mentioned in the motion. The 32nd report, on cataract surgery in Scotland, calls for greater consistency of performance between similar institutions and advocates greater use of benchmarking. I entirely accept that benchmarking, whether between institutions or regions, is a valuable technique for improving value for money.
There has been much discussion this afternoon about devolution and its effects, and the contribution of the right hon. Member for Haltemprice and Howden has been acknowledged. I say to all hon. Members that we want to make sure that the lessons of best practice after devolution are widely spread. The Committee, the Government and I want that.
The 44th report, on the administration of the disability allowance in Northern Ireland, provides a valuable insight into the performance of the Social Security Agency. The report is valuable in so far as it highlights the need for the agency to keep abreast of developments in Great Britain in protecting its systems against fraud.
The Government are absolutely determined to improve value for money in public services. Two initiatives have been mentioned: the introduction of public service agreements and greater cross-departmental working in the delivery of public services. My hon. Friends the Members for Shipley and for Croydon, Central (Mr. Davies) spoke about the importance of public service agreements, which were first published last month in a White Paper entitled "Public Services for the Future: Modernisation, Reform, Accountability". The White Paper sets out clear aims and objectives and specific targets for improving the effectiveness and efficiency of the services that the public receive and are entitled to receive at a high standard.
Linking the investment of public money to the delivery of specified outputs and standards of efficiency is a major step forward in improving value for money. It is also a significant improvement in accountability—that is the aim of the Committee's work—making it much easier for Parliament and the general public to judge the Government's effectiveness in meeting their objectives.
The second initiative concerns a much greater emphasis on effective cross-departmental working. The right hon. Member for Haltemprice and Howden and I might have a discussion about what phrase should be used. I like the phrase "joined-up government". Using resources well is not just a matter of providing stability, flexibility and the right incentives; it is also important to ensure that Departments and other bodies work effectively together to deliver public service objectives, as all hon. Members want. The key challenges in joined-up government are not only to identify better routes for delivering services to the public but to ensure that we maintain clear lines of accountability.
There has been much discussion about resource accounting and budgeting. Important points were made by Conservative Members, including the hon. Members for Cotswold (Mr. Clifton-Brown) and for Bexhill and Battle, and by my hon. Friend the Member for Croydon, Central.
We greatly welcome the Committee's continuing vigilance over the introduction of resource accounting and budgeting, as set out in its 67th report. We have absolutely no doubt that resource accounting and budgeting will enhance the quality of financial information available to the House and will enable Departments to manage their resources more effectively on behalf of the taxpayer. There is considerable agreement about the fact that that is the way forward.
As the Committee knows, our intention, subject to Parliament's approval, is to implement resource accounting and budgeting fully from 2001–02. In the meantime, in response to the question put to me by the hon. Member for Cotswold, we propose to report to Parliament on progress at defined "trigger points". The Committee's approval of the trigger point strategy is most welcome, and I am delighted that all Departments have Successfully achieved the first trigger point—stage 1 approval—before the December 1998 deadline. I can tell the hon. Member for Cotswold, and my hon. Friends who raised the same issue, that it is an important matter for the


Department and for me, and I shall work with the Committee to make sure that we get the implementation absolutely right. I fully share the Committee's view of its importance.
The right hon. Member for Haltemprice and Howden also mentioned parliamentary involvement in the validation of performance information. I understand what he says, but I hope that the right hon. Gentleman and the Committee will recognise that, unlike the position with regard to financial information, there is as yet no agreed set of standards for performance information. My Department believes that the appropriate way to proceed is to develop such standards. I undertake to keep the matter under review and to consult other interested parties, including the NAO. I may not be able to give the right hon. Gentleman the reply that he seeks, but I undertake to keep in close contact with him and the Committee on this issue.

Mr. Clifton-Brown: Would the hon. Lady be prepared to examine the performance indicators published by executive agencies to see whether there were any useful lessons to be learned for Government Departments?

Mrs. Roche: I certainly undertake to consider that, and I thank the hon. Gentleman for his helpful suggestion.
Quite rightly, mention was made this afternoon of the great concern felt about the loss of public funds through fraud, which was highlighted in several of the Committee's reports. The motion that we are debating refers to the Committee's 34th report, which deals with the further fraud at the British embassy in Amman. The Foreign and Commonwealth Office has rightly acknowledged that there were failures in basic financial controls, and financial controls and disciplinary arrangements are being tightened.
Frankly, I fully accept that one of the most disturbing features of the case is that it happened so soon after the Committee took evidence on other irregularities at the same embassy. It is imperative—I hope that careful note will be taken of what I say—that, where the Committee highlights failings, effective corrective action is taken swiftly.
Another issue dealt with this afternoon—my hon. Friend the Member for Reading, East referred to it in great detail—is the content of the Committee's 27th report, entitled "Measures to Combat Housing Benefit Fraud". The Green Paper on fraud, which was published in July, sets out what we intend to do to tackle welfare fraud. I know that my right hon. Friend the Secretary of State for Social Security is determined to minimise losses that occur through fraud and error so that he can increase the resources available to meet genuine need, which is what we all want.
My predecessor, the Paymaster General, took part in a joint Treasury-NAO seminar on the subject of tackling the risk of fraud. She was impressed by the determination and expertise that Departments bring to bear to counter fraud risks. She also noted the valuable contribution of the national audit agencies, including the work of the Audit Commission, in areas such as data matching.
Hon. Members have referred to the European Union. The Government have consistently supported measures to strengthen the financial management of the EU budget,

and we shall do everything we can to fight fraud. We used the United Kingdom presidency of the European Union to ensure that Council conclusions focused on the real areas of concern—over-budgeting, poor objective setting, over-complex legislation and little real evaluation of results.
I dealt with structural funds in a former incarnation in the Department of Trade and Industry, so I understand the points that were made about delays in payment. We welcome the German presidency's proposals for an independent, high-level group to consider ways to strengthen the fight against fraud.

Mr. Christopher Gill: Does the hon. Lady agree that fraud is endemic in the European Union? The only way to eliminate fraud is to do away with the regimes in which fraud is deep-rooted and endemic.

Mrs. Roche: I have great respect for the hon. Gentleman, but I suspect that he and I have different views on the European Union. The Government and members of the PAC are committed to ensuring that proper proposals are in place. We shall act vigorously in conjunction with our European Union colleagues, particularly in the Council of Ministers, to ensure that, when fraud occurs, every possible measure is taken to deal with it.

Mr. Wardle: When the hon. Lady talks to her German counterparts about the initiative that they are proposing under their EU presidency, will she suggest that one of the players in that investigation should be our Comptroller and Auditor General, Sir John Bourn?

Mrs. Roche: I note the hon. Gentleman's point, but he will forgive me if I do not give him an instant reply. That point has also been made by other hon. Members.
I shall deal with the important issue of NAO access, which has been raised by several hon. Members. I agree with the hon. Member for Bognor Regis and Littlehampton that my hon. Friend the Member for Liverpool, Garston (Maria Eagle) made a thoughtful speech on this subject. I listened carefully to the points made in the debate. When I came to this brief, I recognised that this was a major issue for the Committee.
I hope that the Committee and the House will appreciate that we have approached the issue of access positively. We were quick to legislate to provide the NAO access to the lottery operator for the purposes of auditing the national lottery distribution fund. We have also made arrangements for NAO access in connection with the grants in aid for the occupied royal palaces. I think it is right to say that the right hon. Member for Haltemprice and Howden has acknowledged some of the improvements that we have made. When we have created new agencies, such as the regional development agencies, we have proposed that the Comptroller and Auditor General should be the auditor. Those are positive steps forward.
I am aware that there have been a number of discussions in the past year on other access issues, such as the possibility of giving the Comptroller and Auditor General a right of access to Government contractors and making him the auditor of publicly owned companies.
On Government contractors, the Government's approach is to provide for NAO access where that is necessary for the financial or value-for-money audit of a Department or agency. Broadly speaking, that will be when all the information necessary for the audit is not held by the audited body.
On publicly owned companies, I understand that the NAO already has access to many of the bodies concerned. Where statute requires the auditor of an non-departmental public body to be a Companies Act auditor, the NAO will have inspection rights. It will also have access through contract clauses to bodies such as training and enterprise councils.
In the short time since taking on my new post, I have not been able to form a final view on whether any further concessions should be made, although I am aware that there are strong arguments against making further changes. Nevertheless, before reaching a final decision, I would be happy to talk through the issues with the right hon. Member for Haltemprice and Howden and the Comptroller and Auditor General. I hope that that approach will be helpful to the PAC. I was conscious of the fact that I wanted to listen to what hon. Members had to say in this debate and to have some further discussions with them before reaching a final view. I hope that that will be helpful to the House.
I was delighted that, in October, the four national audit agencies launched the Public Audit Forum with the very clear message that
Good government needs good audit".
That is a positive example of the spread of good practice. It will strengthen co-operation among the national audit agencies, promote the setting of common standards and help to minimise the burden of audit on audited bodies.
The hon. Member for Bournemouth, East (Mr. Atkinson) spoke about the millennium bug difficulties. The hon. Gentleman and I have not always agreed on the method by which one tackles that important issue, but I shall take this opportunity to pay tribute to him. He was the first hon. Member to raise the issue and he has done the House a great service. When the issue was raised initially, it was not thought to be important. In fact, it is very important and the hon. Gentleman has pioneered work in that respect.
As the hon. Member for Bournemouth, East knows, the Government take this issue seriously. That is why we formed Action 2000 and gave it the resources necessary to continue the job. It is also why, under the chairmanship of my right hon. Friend the Leader of the House, there is considerable action taking place throughout Government. I pay tribute to the hon. Gentleman for his tireless work.
A great deal has been said today about follow-up activity and there have been many thoughtful remarks about the very nature of the PAC. A great deal of work goes on, but do the Government and Whitehall listen? It is for all of us to ensure that we do, and it is for the PAC to look at how the follow-up activity is implemented. I very much want to work with the Committee to ensure that that takes place.
We all realise that good managers, whether in Government or outside, need to remember the old lessons as well as the newer ones. In looking back, I was struck by how the Committee's reports continue to illustrate both those points. Some of the most notable instances of fraud arise because of basic failures in the elementary oversight of basic controls, in authorising payments on the basis of hand-written documents or treating delivery notes as

invoices. We need to make sure that basic controls are being implemented. As to newer lessons, I am confident that the Committee's recommendations on privatisation will provide a coherent and constructive source of guidance.
More generally, I was struck by the clear, firm and constructive nature of the reports, even when they were critical, as they often were. I am sure that the breadth of the Committee's efforts and its energy will keep us all on our toes.
I look forward to working next year with the right hon. Member for Haltemprice and Howden, with the Committee and with the House in ensuring that the House and the people of the United Kingdom—whom we are so privileged to serve—get value for money from their public services and receive the very best public services we can possibly provide for them.

Question put and agreed to.

Resolved,
That this House takes note of the 1st to 67th Reports of the Committee of Public Accounts of Session 1997–98, and of the Treasury Minutes and Northern Ireland Department of Finance and Personnel Memoranda on these Reports (Cm 3880, 3893, 3894, 3936, 3955, 3973, 4004, 4015, 4021, 4041, 4055, 4060, 4069, 4075) with particular reference to the following Reports:

Twenty-seventh, Measures to Combat Housing Benefit Fraud (HC 366);
Thirty-second, Cataract Surgery in Scotland (HC 546);
Thirty-fourth, Foreign and Commonwealth Office: Irregular Payments at the British Embassy in Amman, Jordan (HC 553);
Forty-fourth, Northern Ireland Social Security Agency: The Administration of the Disability Allowance (HC 527);
Forty-sixth, The Contract to Develop and Update the Replacement National Insurance Recording System (HC 472);
Sixty-first, Getting Value for Money in Privatisations (HC 992);
Sixty-seventh, HM Treasury: Resource Accounting and Resource-Based Supply (HC 731).

Orders of the Day — NORTHERN IRELAND GRAND COMMITTEE

Ordered,
That—

(1) the Order of the House of 2nd December relating to sittings of the Northern Ireland Grand Committee shall have effect with the substitution of the words '2.30 p.m.' for the words '10.30 a.m.';
(2) the matter of the Discussion Paper entitled "Putting it Right—the case for change in Northern Ireland's hospital service", being a matter relating exclusively to Northern Ireland, be referred to the Northern Ireland Grand Committee for its consideration; and
(3) at the sitting on Thursday 28th January—

(i) the Committee shall consider the matter referred to it under paragraph (2) above;
(ii) the Chairman shall interrupt proceedings at 5 p.m.; and
(iii) at the conclusion of those proceedings, a motion for the adjournment of the Committee may be made by a Minister of the Crown pursuant to Standing Order No. 116 (5) (Northern Ireland Grand Committee (sittings)).—[Mr. Dowd.]

Orders of the Day — ENVIRONMENTAL AUDIT COMMITTEE

Ordered,
That Mr. Neil Gerrard be added to the Environmental Audit Committee.—[Mr. Dowd.]

Orders of the Day — Fisheries

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Dowd.]

Mr. Shaun Woodward: I am grateful for this opportunity to address the House on a serious issue which I hope will interest the House—the sustainability of fisheries.
Few hon. Members will be aware of a significant conference that was held in London last Monday. It was essentially a workshop to consider the crisis facing the world's oceans, in preparation for the April United Nations meeting, in America, on sustainable development. The conference was sufficiently important for the Deputy Prime Minister to agree to give the keynote address, in which he identified some of the concerns which he felt were becoming increasingly prominent not only among the scientific community but among the world's responsible fishing communities. However, the need to act swiftly was urged not on the British Government but on others. I believe that the British Government could be doing much more to take a lead in protecting both our own and other countries' fishing stocks.
If we are to discuss and make proposals on managing the world's oceans, it is critical that we should understand the over-fishing crisis. My belief—which has been formed by consulting with scientists and responsible bodies working on the issue; there are no party political points to be made on the issue—is that the policy currently being pursued by the British and other Governments, by continuing to set quotas that are incompatible with sustainable fisheries, is presenting huge risks. The fact is that more than half the stocks exploited by United Kingdom fishermen are below safe limits or are in danger of falling below those limits.
Sustainability is far from being treated as a crucial, central issue in debates on the future of the common fisheries policy. I acknowledge that sustainability plays its role in debates, and that lip service is paid to it, but, when it comes to the crunch, it is not at the heart of the way in which common fisheries policy is formulated. Current fishing practices have been based on inaccurate data, sometimes on a wilful disregard of scientific evidence and on a failure to consider the long-term consequences of current policies.
In some ways, the arguments about sustainable fisheries, and the way in which those arguments are reported, resemble the debate, a decade ago, on fears about global warming. A decade ago, that evidence was ignored, and the scientists dealing with it were dismissed as eccentric or as scaremongers. Today, we are facing the consequences of ignoring their advice, of failing to understand that they were not eccentric and of undermining what they were telling us. Global warming is now a crisis, and the world must face a more serious problem than it would have had to face had we been more responsible and appreciated the demands of a sustainable environment and of sustainable environmental policy.
At least some of the Deputy Prime Minister's arguments about oceans reflected a growing body of opinion in this country. Those opinions come from organisations such as the World Wide Fund for Nature and the Royal Society for the Protection of Birds, which

is interested in oceans because of its concern about the conservation of sea birds, as well as newer bodies such as the Marine Stewardship Council, in which I declare an interest as an unpaid director.
The Deputy Prime Minister spoke about the crisis facing fisheries. It is well known that 60 per cent. of the world's fish resources are in danger of being over-exploited. He spoke of the need for effective regional agreements to encourage responsible fisheries and sustainable harvests. He assured the conference that the Government take the issue seriously, but that demands much more than they are currently delivering—not rhetoric, but action now.
In summing up, the Deputy Prime Minister said that the thrust of his remarks was to improve public understanding of what is happening to the seas. He spoke of the need for a barometer that people understand. The real need now is not for greater public understanding—the public are beginning to understand ever more about the problem—but for more Government action and help to create a climate in which we can move significantly towards a more responsible and sustainable fisheries policy.
Tonight's debate goes to the heart of the subject of the oceans workshop and concerns about the future of our seas. It is significant that it is to be answered not by a Minister from the Department of the Environment, Transport and the Regions, but by one from the Ministry of Agriculture, Fisheries and Food. That is not a surprise, because that is how we have always done business, but as we have learnt ever more about sustainable fisheries, we have come to understand the need for close integration of environmental policy with fisheries policy. That division is one of the Government's problems in addressing the issue. The Minister replying to this debate speaks from one Department, but the Deputy Prime Minister speaks from another. Would the speech that the Minister will make tonight be the same if he had the environmental brief as well?

Mr. John Gummer: Does my hon. Friend accept that the difficulty with fisheries, particularly in the European Union—although this is also true elsewhere—is that fisheries Ministers could more correctly be referred to as fishermen's Ministers? They are fighting for their fishermen's share of the fish rather than ensuring that fish will be there for the fishermen of the future.

Mr. Woodward: My right hon. Friend makes a crucial and telling point, which I would like to develop. The fact that the debate is dealt with by the Ministry of Agriculture, Fisheries and Food, not the Deputy Prime Minister is a symptom of the problem, not just for fish stocks, but for those employed in the fishing industry. Up to 200 million people across the world are employed in fishing and related industries. There has been an increase in the number of fishermen in the UK in the past year. A future fisheries policy must be more environmentally sensitive if fishing stocks are to be preserved and are to continue to provide jobs for people. The Government need to say more and to act more clearly to demonstrate that they understand that sustainable exploitation of natural


resources on land, in the sea or in the air that we breathe must be considered in the round. That will require more restraint, tougher quotas set by the Government and more difficult trade-offs with the industry.
There is no better example of the failure to grasp the need for sustainability than the devastation caused to fishing stocks and fishermen's livelihoods after the collapse of the Canadian grand banks in 1992. Until then the area was considered one of the world's richest sources of cod. Of course there had been the scaremongers—the scientists who had warned about over-fishing—but their warnings were regarded as simply eccentric. In 1992 one of the world's richest sources of cod collapsed overnight as a result of chronic over-fishing. The consequence was not only the devastation of the fish stocks and the appalling collapse of the cod stocks, but the loss of 40,000 jobs—nearly twice the number employed as fishermen in the United Kingdom today.
The fishery remains closed and there has been no significant recovery of the fish stocks. The ecosystem has undergone irreversible change. It is no longer a matter for the Canadian equivalent of MAFF because there are now no fishing interests to protect in the area. It is no longer a concern to the environmental interests in Canada because the fishing stock has been wiped out. We need to take note of the failure of the two Departments there to work hand in hand.
It would be interesting to hear from the Minister this evening what steps he believes need to be taken by his Department to achieve greater co-operation in terms of the action plans that need to be made by his Department and the Department of the Environment, Transport and the Regions.
There have been many arguments for a precautionary approach. I welcome the steps taken by the European Union and I pay tribute to the role which I am sure the Minister played in the direction taken in the Council in December 1998—to apply a precautionary approach to catch limits.

The Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. Elliot Morley): It was not uncontroversial.

Mr. Woodward: Indeed. No environmental policy is likely to be uncontroversial. I recognise that problem and that is why this is not a party political issue and an opportunity for the Opposition to take potshots at the Government. It will require consensus, but that needs to be built. The British Government can play a significant role in achieving that consensus.
Before one makes too much of the precautionary approach that was achieved at the Council in December 1998, it has to be recognised that it is no more and no less than what EU Ministers signed up to at the 1995 North Sea conference when they pledged to apply the precautionary principle to managing our fish stocks. There were three years between those two meetings, and that crucial loss of time will make a difference. We cannot say that we shall have another agreement now and in three years' time we may achieve another implementation and perhaps everything will be all right. We are being warned—just as we were warned about global warming 10 years ago—that action needs to be taken now, and not in three years' time.
It is interesting to refer back to the North Sea conference in 1995. The follow-up intermediate ministerial meeting conference in Bergen in 1997 pledged to draw up recovery plans for the most depleted stocks, giving priority to cod. In 1997 the EC conceded in its progress report on the IMM:
Up till now it has not been possible to establish a specific recovery plan for cod.
It is a disaster. Not months but years have elapsed, yet there is no specific recovery plan for cod. The establishment of a coherent recovery plan for cod remains a priority for EU member states. The problem is that the elements of such a recovery plan require much more robust protection of the seedcorn of the year-class. That requires agreements on no take zones to protect key stock concentrations. The British Government must punch above their weight to bring about far better responsible good practice by the fishing industry. The Government must begin to think about what they are going to do to reward those who do well and to discourage and punish those who are irresponsible.

Mr. Adrian Sanders: I am grateful to the hon. Gentleman, to whom I gave notice of my wish to intervene. I should like the Minister to clarify the position on conservation gone too far. I have a number of wreck fishing vessels for hire in my constituency, and owners are concerned that they will be restricted to three finned fish per boat. Those boats take 12 or more people out to sea, and they cannot share out three fish among 12 people. Anglers simply will not hire those vessels, and a very important industry—which is fishing-related, but not fundamentally about fish stocks—will be in trouble as a consequence of over-conservation. That aspect of the debate must be addressed by the Minister.

Mr. Woodward: It will be interesting to hear what the Minister has to say about that. However, it would be breathtaking to hear from the Minister this evening that he thought for one moment that in anything related to fishing policies we were in a state of over-conservation. The reality is far from that: the situation is desperate.
The hon. Member for Torbay (Mr. Sanders) should look at what has been said by organisations such as the RSPB. The society said that, with hindsight, the 40,000 Newfoundland fishermen who have been out of work since 1992 because of the grand banks cod collapse would have preferred a tough precautionary approach to the endless compromise, and what the hon. Gentleman described as "over-conservation". If we had had at that time a tough precautionary approach—which might have made it very difficult for the fishermen—there still would have been a fishing industry today, supplying jobs for those people.
The failure to look ahead and the preoccupation with the here and now in the face of the evidence means that we not only face a crisis but are marching knowingly and irresponsibly towards a position in which we will exhaust our fishing stocks around the world.

Mr. Sanders: I accept the hon. Gentleman's point, but I am referring to pleasure boats which have a restriction of one fish per angler, or 12 fish in a 12-person boat. Allegedly, that is being reduced to three finned fish per


boat. This is, to coin a phrase, a drop in the ocean in comparison with the problem that the hon. Gentleman is raising.

Mr. Woodward: I should not spend too much time in this debate being preoccupied with drops in the ocean. Nobody wants to see anglers disturbed; as is the case with many other aspects of wildlife conservation, those engaged in a sport are often the best stewards for the continuation of an industry. It will be interesting to hear whether the Minister supports that view beyond fisheries and into other areas.
In the debate on the common fisheries policy a month ago, the Minister was at pains to speak of balance. The balance of which he speaks—albeit a politically understandable balance which he must produce in his Department—is, in fact, not a balance at all; it is a business of trading off the demands of the fishing industry with the growing sense of the crisis of the fishing stocks.
For the reasons outlined by my right hon. Friend the Member for Suffolk, Coastal (Mr. Gummer) this evening, I believe that the difficulties that the Minister faces within the Department are historical. However, surely we should now break out of those historical chains, and recognise that they are doing enormous damage to the prospects of creating a sustainable fisheries policy.
The scale according to which the Government judge the balance is based on a critical assumption: what is the most that the catching sector can get away with? What is the largest amount of fish that can be extracted?
On the basis of the data and evidence that we now have, it appears that the position is, at best, a lottery. Given increasing scientific evidence about the way in which fishing stocks are being exhausted, it is hugely irresponsible to continue with some of our fishing policies, which will simply cause more and more devastation.
Let us take the example of Canada's grand banks. Getting it wrong will not only destroy fishing stocks, but throw thousands of people on to the dole. That will be the new deal for Britain's fishermen if the Government are not brave enough in the months ahead to come up with some tough and different policies on fisheries for the future.
The current safety thresholds for fishing stocks of European fish are based on defining the greatest number of fish that can be extracted—not safely extracted, just extracted. The calculation then becomes a target: the target is to leave the minimum number of fish in the sea. The Government are presiding over a policy that ignores the warnings that we are being given. We are gambling with very high stakes. Surely the time has come for the Government to ask not what is the most that can be extracted, but what is the most that we can responsibly extract. We should not think in terms of quotas for the most than can be extracted, per se.
At present, given the data that we have, the margins for error are all over the shop. If the wrong calculation is made, the results will be catastrophic. It is clear from the evidence that our current fishing policy is tantamount to a culture of chronic crisis.
The RSPB says:
The sustainability of these stocks has, for the past few years, been dependent on the unpredictable incidence of the occasional year of above-average recruitment. This is a lottery and it is no substitute for rational management
in the face of the information that we now have. The Government need to end the lottery and to preside over a process of rational management.
In some ways, the Deputy Prime Minister recognised that at the oceans workshop. We have learnt a little from the problems that were caused when the scientists' warnings about global warming were ignored a decade or so ago. Rhetoric, however, is not the same as action. We know that 60 per cent. of the world's most commercially important fish stocks are fully fished, over-fished or severely depleted, and Britain is not exempt from the crisis.
Can the Minister tell us this evening that the information on which he has based his quotas for this year is so reliable and comprehensive that the current fishing of the North sea definitely will not lead to a position like that of the grand banks in Canada? In fairness to him, I must say that he cannot tell us that. He should read the evidence provided by his own Ministry's 1988 report. On page 134, it states:
In 1997–s Agency, the Centre for Environment, Fisheries and Aquaculture Science…monitored the level of 31 stocks of fish and contributed detailed advice on their size composition to ICES.
A measure of the state of the stocks is the proportion fished by the UK and other EU fleets considered to be above the level (known as the minimum biological acceptable level) necessary to avoid an increasing risk that they will fail to reproduce themselves".
That figure might have been expected to decline if we were operating a responsible, sustainable fisheries policy; but in 1994 it was already 42 per cent. above the desired level. In 1995 it rose to 43 per cent. above the level, and in 1996, the last year for which the Ministry has published data, it rose to a massive 51 per cent. above it. The risk has increased every year; it has not gone down. The jump from 1995–96 should alarm everyone—and it should alarm the Minister most of all.
As the Deputy Prime Minister said, we do not simply need the general public to understand more; we need them to be reassured that the Government understand the figures and will not just speak about the problem, but take action on it.
The deputy director of CEFAS—the Centre for Environment, Fisheries and Aquaculture Science—warned in 1995 that
we have never been here before and we don't know how long we can sustain viable fishing stocks…or whether the marine ecosystem will allow stocks ever to recover to previous levels.
Those are not my words, but those of the deputy director of CEFAS. Surely, that is at the heart of the issue that we need to discuss. There is no question of over-conservation when we have a warning of that nature.
The former Minister of Agriculture, Fisheries and Food, the right hon. Member for Copeland (Dr. Cunningham), showed again that he understood the danger in a letter of August last year, where he cited concern about the state of North sea cod stocks:
It is certainly the case that North Sea cod stocks are now at 'uncharted low levels' and all fisheries managers are aware of the poor state of those stocks.


However, the problem is that, instead of taking heed of that warning and doing something about it, he immediately drew comfort:
Even at these low levels there are still some 400 million individual cod in the North Sea of one year of age or more and I understand that the latest scientific information is that there has been a good recruitment of juvenile cod to the fishery.
Hooray—there has been a good recruitment of juvenile cod to the fishery, but the problem is that that demonstrates all too sadly that there is only partial understanding. UK waters may be awash with juvenile fish, but that is exactly all that there is. The recruitment may be there because that is all there is left; we have exhausted the older, mature fish.
The crucial question for the Minister is not how many individual cod of one year of age or more may be in the North sea, but how many individual cod of four years of age or more are in the North sea, because it is only at the age of four years or more that those fish will begin to breed. Again, it would be interesting to know whether the Minister could tell us that figure. I suspect that he cannot because, in all fairness, we have not understood, until now, the crucial nature of having such information.

Mrs. Margaret Ewing: I am listening with great interest to the hon. Gentleman. Is he suggesting that there should be a total closure of North sea cod fisheries, or that there should be an alternative mechanism for catching cod that would involve the extension of the net mesh? I am interested to hear what he puts forward as alternative suggestions.

Mr. Woodward: I am grateful to the hon. Lady for her intervention. I will come specifically to that point.
I know that, like his predecessor, the Minister has been concerned with the problem of discarding; I know that he cares about the issue. The scale of juvenile undersize fish has undoubtedly been a root cause of the tragic rise of discard rates in recent years. If one thinks that through, one is saying that a high proportion of the fish that are caught have to be discarded because they are below the legal minimum landing size.
If that problem is not dealt with adequately, it will simply compound itself. The tragedy in the North sea for cod can be seen all too clearly from the fact that half, by number, of all the cod and haddock that are caught in the North sea are thrown back dead into the sea because they are too small. Those figures are alarming in themselves. We know that the North sea cod fishery is also riding its luck. It would be foolish in the extreme to suggest that an exceptionally good recruitment year in 1996 demonstrates that fish stocks have recovered completely. Far from it: one good year of recovery is cause neither for celebration nor complacency.
As we discussed earlier, Ministers promised in 1997 to prioritise a cod recovery plan. The 1996 juveniles are now the three-year-old mainstay of the fishery, but only if they have not been caught or were not part of the half by number thrown back dead into the sea. The Minister will know that the scientific evidence worries bodies such as the International Council for the Exploration of the Seas, which has stated that it remains
pessimistic about the likelihood of noteworthy improvement of the cod stock in the medium term.
That is surely very worrying.
Tonight, the Minister has an opportunity to say whether he believes in the quotas in whose agreement he played a part, and whether they go far enough. He will know that scientists recommended a cut of 11 per cent. in the 1999 cod quota. That was moderated by the European Commission—not up, but down to just 5 per cent. Will the Minister say whether the Government will be party to any further dilution of the advice designed to restore North sea cod stocks? I hope that he will confirm that they will not.
I accept that the fishing industry would be very angry at such a response. However, that is the difficulty facing a Minister who must recognise the importance of the environmental factors involved. If those factors are not taken into account, there will be no fishing interests to preside over in the future, because neither the fish stocks nor the jobs will exist.
The German presidency has launched an initiative to protect young cod from over-fishing and to give them a chance to mature. Will the Minister take this opportunity to align the Government behind that initiative, as the Royal Society for the Protection of Birds has asked already, to create an area in the German bight that would be closed to cod fishing in 1999?
The acid question is not "Where are we now?", but "Where will sustainable fisheries, fish stocks and the fishing industry be in five years' time?" Unilever, which makes Bird's Eye fish fingers—and I could cite other corporations—has begun to face the problem square on. It has realised that there will be no cod for fish fingers in five or 10 years' time unless sustainable fisheries are adopted as the way forward. At present, the fishing industry presides over dwindling fish stocks that depend on the lottery of rare years of good recruitment. Should not the Minister be saying more to bring together the interests of the industry and of the environment, and to produce a concerted effort to restore stocks to a level that will provide long-term and sustainable catches, with high proportions of mature fish? That would guarantee that the 200 million people in the world whose livelihoods depend on such factors will continue to have jobs.
Although it will be difficult, Britain has an opportunity to set an example, to take a lead in the matter and to punch above its weight—not only in the radical reform of the EU's common fisheries policy but also in the world as a whole.

Mr. Christopher Gill: I sense that my hon. Friend is approaching the end of his remarks, but will he say whether he intends to refer to the huge tonnage of mature, saleable fish that is dumped back, dead, into the sea? I listened carefully to his description of the huge number of fish thrown back dead because they are considered to be too small. Is he worried that the European Commission's recent reduction in the minimum landing size for certain species will make the problem even worse? It will not have escaped my hon. Friend's attention that, under the new quotas for this year, the quotas for sand eels will be maintained at their previous rate. Many people regard that species as an essential food for future fish stocks in general.

Mr. Woodward: I am grateful to my hon. Friend for his intervention and I hope that he will understand from what I am about to say that I have recognised that


problem. However, in a relatively short Adjournment debate it is impossible to explore all aspects of the matter. My hon. Friend and other hon. Members rehearsed many of the arguments in the debate shortly before the House rose for Christmas. I am concentrating on this aspect this evening, because I want to tease out from the Minister whether we can move on from simply recognising that this is yet another problem and can arrive at a situation where we see all the problems and begin to recognise the need to do more before there is nothing left to be done.
I and certain organisations believe that a full study of all the United Kingdom fish stocks needs to be carried out over a number years with directly comparable figures. As the Minister will readily recognise, no full study has been carried out with comparable data and so we have constant difficulty in producing meaningful information. Without the information it is difficult to produce constructive policies with which we can proceed sensibly. Perhaps the Minister will tell the House whether the Government will agree to make additional funding available for that sort of exhaustive study of UK fish stocks to produce the comparable data.
In addition, certification schemes are beginning to emerge. Can the Minister tell us tonight to what extent he believes that voluntary certification is the way forward for the fishing industry? I make no apology for pushing that matter. As a director of the Marine Stewardship Council, I know that it has been at the centrepiece of the work that that organisation has been doing since it was set up by an initial grant from Unilever and the World Wide Fund for Nature. The MSC wants certification to be at the heart of future fisheries policies and wants consumers to be made aware of the labelling that would go with certification so that they are encouraged to choose those products over non-certified fish.
So far, the response from retailers and the industry in the United Kingdom has been constructive and there have been constructive approaches from those within the fishing industry, who recognise that the long-term policies that we are pursuing will probably leave us with no fishing stocks to fish.
At the oceans conference, the Deputy Prime Minister talked of the need for
a whole series of actions where international agreement and support is needed to respond to the threats from human activities to the seas.
The certification programme would offer just that.
The Deputy Prime Minister has said that we need to find such a solution. The truth is that we have found it. The industry, retailers and consumers believe that certification can work—they have demonstrated it in other areas of environmental policy. Tonight, the Minister has an opportunity to tell the House his views on the policies of the MSC—if he is not fully aware of them, I am sure that the council will willingly brief him, or, if he has had one briefing, give him another. The British Government have the opportunity to join other signatories and bodies from around the world that are queuing up to come behind that policy. Other countries are beginning to recognise that sustainable fisheries can be produced only through international co-operation, which has to be based on market solutions. Those will best come about speedily through a voluntary certification programme.
Perhaps the Minister will tell the House his views of the certification programme this evening. The crucial thing is that the Minister is stuck in a Department that has historically been concerned with the fishing industry.

It being Seven o'clock, the motion for the Adjournment of the House lapsed, without Question put.

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Allen.]

Mr. Woodward: It is vital that the Minister recognise the demands of the fishing industry and the fishermen. No one would suggest that that cannot be done, but the long-term interests of fishermen in Britain, the European Union and around the world will be protected only if we fundamentally shift fisheries policies away from the current minimum target quota system to a responsible, sustainable, environmentally friendly policy that, in the long term, will continue to provide jobs for people in Britain and throughout the world.

7 pm

Mr. John Gummer: I declare an interest as the unpaid chairman of the Marine Stewardship Council and as the Member for a constituency with 74 miles of coastline and many small fishermen. I welcome the opportunity that the debate secured by my hon. Friend the Member for Witney (Mr. Woodward) creates to consider sustainable fishing.
I congratulate the Minister on the tough stance that he has taken several times in fighting for the sustainability of our fish stocks. I recognise that his job—I did it longer than anyone—is not easy because the fishing industry is self-destructive in that every section finds reasons to defend its practices against those of other nations or other parts of the nation.
I well remember fishermen on the west of Scotland telling me that if only those on the east of Scotland behaved as they did, everything would be all right. Fishermen in the south-west explained that if only the Scots behaved like them, it would all be all right. The British said that if only the rest of Europe behaved like us, it would all be all right. Exactly the same is said in Holland, Denmark, France, Germany, Spain and Portugal; it is always someone else who is at fault.
The House has a responsibility, as far as possible, to support measures, albeit unpopular ones, that a Government of any sort seek to take to protect the future of our fishing industry. Having congratulated them, we must press the Government to move further. I have some practical suggestions that the Minister might like to accept.
First, the Minister is right to realise that the answers cannot be found nationally. Fish do not carry any flag on their fins; they swim where they wish. There is no such thing as a Scottish, English, French or German fish. We have always shared fishing grounds and argued about them. There is nothing wrong with a common fisheries policy. It is the policy, not the commonness, that is wrong. We must find a common answer for a common stock in a common resource. That has always been true.
The Minister must find the answers within the common fisheries policy, which has given the UK defence of an amount of fish in line with our historic position. If one looks back over the matter, it has been rather more


generous than many would have thought. I have looked back very carefully because of the sort of criticisms that are made. He is right to work within the Community, but I hope that he will take a series of clear stands. I hope that all hon. Members will support him if he does.

Mr. Gill: I know that my right hon. Friend is a staunch defender of the common fisheries policy. Does he recognise that that which everyone owns, no one owns? There is no incentive for fishermen to protect or conserve stocks when they know that what they conserve benefits someone else. "Someone else" in the context of the European Union is another member state. When my right hon. Friend gave examples of countries that were dissatisfied with the present arrangements, he listed only members of the EU. Has it not occurred to him that some countries are satisfied with their fisheries regime? Some feel that conservation activities are conducted in a much more satisfactory way under the present arrangements and that they have satisfactory fisheries. I instance Norway, Iceland, the Falkland Islands and even Namibia.

Mr. Deputy Speaker (Sir Alan Haselhurst): Order. The hon. Gentleman is exceeding his licence.

Mr. Gummer: My hon. Friend is fiercely opposed to the EU, and I understand that, but fisheries are a common resource because we all own them. The only way in which the Icelanders could introduce their system was by stealing a resource that they previously shared. They decided that what was previously a shared resource was theirs. If my hon. Friend thinks that we are going to say to the French, "That which we have shared with you for ever we are going to take into our control", he is talking nonsense. There is no possibility of managing our fisheries except together.
It is a terribly sad view of the world to suggest that we cannot co-operate with our neighbours; that we can deal only with stuff that we own in a narrow, partisan way. That is not the way forward for the future. That is not what is happening throughout the EU. It is not what is happening in the rest of the world. It is not what the Canadians have discovered in dealing with the Americans over Atlantic salmon. That is not what any country is discovering. The only way in which we can manage our fisheries other than according to present arrangements is to return to the old practice of bashing the fishermen over the head with a marlin spike because people took what they said was theirs.
That practice was all right when we had so much fish that we could all fish it, but now that we have so little and we have equipment that enables us to find fish so easily, we must operate in common. My hon. Friend the Member for Ludlow (Mr. Gill) has the advantage of representing a landlocked constituency. Unlike me, he is not subject to the daily influence of fishermen. He does the fishing industry a grave disservice by suggesting that there is an alternative way forward. We must make the system work. I want to suggest some tough measures to the Minister to make it work.

Mr. Gill: Will my right hon. Friend give way?

Mr. Gummer: I really must not. I have been asked to finish in time for the Minister to answer.
Will the Minister return to a policy that I reached and continued to pursue for the last three years of my time as fisheries Minister? Will he maintain the United Kingdom's opposition in principle to any kind of industrial fishing? Will he support the European Union in its desire to ensure that fish-meal is no longer used in a range of products for which it is clearly unsuitable when the requirements for fish rejuvenation are borne in mind?
Will the Minister recognise that, however tough the quotas and the total allowable catches may be, if they are all that the fish stocks can sustain, he needs to appeal to men and women of good will to support him in holding out for them? It is no longer any good saying, "We want a bit more ourselves, so we will give them a bit more." If that happens, in the end the figures just do not stand up.
Will the Minister press the EU to say in negotiations with countries beyond the Union, especially African countries, that no agreements to fish in their waters will be entertained without the EU paying for and running proper policing mechanisms? That will show that what we have promised to do, we will do and that what we have promised that we will not take, we will not take. It is no good asking Namibia, Togo or Senegal to police those fisheries. If we want to fish in their waters and zones, we must provide proper restrictions on our own fishermen and pay that cost; otherwise, we shall contribute to the unsustainability of their waters, as we already have to our own.

Mr. Gill: Will my right hon. Friend explain why, in answer to my previous question, he referred to the waters of Iceland and the British Isles as a common resource, whereas he is now talking about African countries having their own waters? He is getting his argument terribly confused.

Mr. Gummer: The fact is that we are part of the European Union and we have signed up to sharing the waters that we happen to have shared, in different ways, for many centuries. That is not true of Senegal, which does not have shared waters. Its geography means that it is a long way across the Atlantic before any other country is reached with which its waters could be shared. In addition, Senegal cannot exploit its waters within its sustainable commitments, so it properly makes use of its waters by doing deals with others who want to exploit them. Under those deals, others agree to certain restrictions and my point is that, although those restrictions cannot be properly policed by Senegal, they can be policed by the countries with which Senegal does those deals, and I want us, within the European Union, to set an example of doing so. I am sure my hon. Friend recognises the clear distinction between those two cases.
Next, I want the Minister to recognise that, in the end, we shall have to change the methods of control, away from those that encourage the discarding of fish, both juvenile and larger fish. My hon. Friend the Member for Ludlow was right to say that the problem is not only one of juvenile fish being discarded.
We in Britain suffer significantly because we failed to carry through the days-at-sea measures that we should have taken. I have hard words for the Scottish nationalists, who are generally in favour of conservation, but who always vote against any particular conservation measure that they think might be electorally unpopular. Should the


Scottish nationalists acquire more power—I understand that such an eventuality might arise in Scotland—I hope that they will act with greater responsibility. Scottish nationalism has done more than any other factor to stop the sort of conservation measures that we need. The nationalists constantly deploy in Scottish constituencies the argument that one can have conservation without any restriction on the activity of fishermen, but that is not possible.
I hope that the Minister accepts that we need a days-at-sea system. We have to introduce really tough measures and to insist that others carry those measures through when common stock is involved. My hon. Friend the Member for Ludlow is right: my fishermen in Suffolk will not accept restrictions on their activities if the men of Lowestoft are not similarly restricted; likewise, the men of Lowestoft will not accept restrictions if the men of Holland, Scotland, Germany or any other place within the UK or the EU are not subject to the same restrictions and to the same policing.
In the past, the Minister has asked for practical measures. I want him to be prepared to go to the European Union to beef up the EU's inspection methods—to increase the powers and the number of the inspectors—and to insist that that is a matter of utmost importance. The previous Government agreed that we needed a common inspection system for a common resource. I believe that we need a stronger inspection system, one in which inspections can be made without notice being given, because it is no good telling people that inspectors are coming in three months' or two weeks' time to check that they are keeping the books properly.
If we are going to employ a days-at-sea system and other restrictions, those measures must be properly enforced throughout the European Union. I hope that the Minister will find the resources and the will to ensure that the EU is better able to police both its own resources and those of others which it agrees to take over.

The Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. Elliot Morley): I warmly congratulate the hon. Member for Witney (Mr. Woodward) on his thoughtful and sensible speech-I confess that, when I saw the title of the debate, although the subject is a laudable one, my feelings were somewhat jaundiced by my previous experience of some of his colleagues on the Opposition Benches and my fear that some of them would attempt to use fisheries as a stick with which to beat the European Union. I am delighted that the debate has focused on the real and important issue of sustainability. I hope to address the hon. Gentleman's points and also those raised by the right hon. Member for Suffolk, Coastal (Mr. Gummer), who, as he said, was a fisheries Minister. He knows that that is one of the most difficult briefs in Government and he is aware of the problems that go with the post. He has drawn on his knowledge to make several pertinent points, which I shall try to address in my response.
I accept absolutely that sustainability is the key to fisheries management not only in this country but in Europe and internationally. The hon. Gentleman referred to my relationship as a Ministry of Agriculture, Fisheries

and Food Minister with my colleagues in the Department of the Environment, Transport and the Regions. He asked whether I would say different things if I were an Environment Minister. I assure him that I would say nothing different, as I believe that there is no contradiction involved in adopting an environmental position and caring about the entire marine ecology as part of a fisheries programme. If we do not have healthy seas, we will not have a sustainable fishing industry. Those two elements go together.
I work closely with my colleagues in the DETR and with those in the Foreign and Commonwealth Office in relation to international sustainability. Only this week, I have discussed the problems of the over-exploitation of the Patagonian tooth fish and the threat to the wandering albatross caused by fishing methods and potentially unregulated international fishing. I take an interest in the international dimension and discuss such matters thoroughly. Important international forums include the intermediate ministerial conference—to which the hon. Gentleman referred—which comprises Environment Ministers. The United Nations agreement on straddling stocks involves the Foreign and Commonwealth Office, and the Government strongly support its implementation internationally.
We are responsible for the sustainable management of our fish stocks, which we achieve through the common fisheries policy. Criticisms of that policy are well known to me, and I concede that it has great scope for improvement. As I have said before, we are seeking ways of securing that improvement. I accept also that several fish stocks in the North sea—indeed, in all our seas—are under threat and that some are seriously threatened. That is why, during the recent round of discussions on total allowable catches and quotas, we accepted that some quotas must be reduced because of the pressures on stocks. I shall return to that point in a moment.
The Government view the science issue seriously. The hon. Gentleman sought an assurance that the Government will support proper science and research in relation to fisheries. protection. Last year, we committed £36.8 million to fisheries science in the areas of research and development and in monitoring and researching fish stocks. We are making considerable financial commitments to the industry.
As the right hon. Member for Suffolk, Coastal kindly noted, I accepted the precautionary principle during this year's discussions at the Council of Ministers. The matter was raised in the intermediate ministerial meeting and, for the first time, the precautionary principle was taken to the Council of Ministers and the Fisheries Council and applied to the setting of TACs and quotas. I made it clear that I accepted the principle, which is not uncontroversial in the eyes of the industry. I also said that, although I believed that there was scope for discussion regarding the impact on the industry of cuts in fish stocks, I would take decisions on the basis of scientific advice. That is how we approached the negotiations in this year's round of discussions.
It is true that we mitigated the impact of the proposed cuts compared with the original proposals. That mitigation was based on advice that we received from our scientists through the Centre for Environment, Fisheries and Aquaculture Science and what we believed that we could accept without endangering the stocks. Where we accepted that there were severe problems, we agreed to


substantial cuts in catches, which will be difficult for the industry. For example, as the hon. Member for Witney said, cod in the North sea will be reduced by 5 per cent. However, haddock will be reduced by 23 per cent. and whiting by 27 per cent. Those are significant cuts.
When I took over this brief in 1997, I made it clear to the industry that I was prepared to make and implement tough decisions that had been outstanding for some time, including decisions on enforcement, the problem of black fish and the overcapacity of our fishing fleet. Those were not easy decisions, and I cannot ignore their impact on our fishing fleet and our fishing communities. I have to take into account the consequences of those decisions, and I know that the hon. Member for Witney accepted that.
I emphasise that we came away from this year's negotiations with a balanced agreement. The balance was that we accepted the precautionary principle and the scientific claims that some stocks were over-exploited and under threat, and we took the necessary action. However, we also took into account the views of the fishing industry and examined the ways in which we could mitigate the effects of those cuts, for example, by finding alternative species that were available for the industry and ways of reducing the cuts. The industry understood that we achieved that balance.
We are taking a range of practical measures. First, if there are regulations, there must be enforcement. We have stepped up enforcement with, I believe, some success, particularly on black fish. We are making progress on that. The industry recognised that illegal landings and depressed prices do it no good. We have introduced designated ports and agreed to the satellite monitoring of larger vessels. Again, I cannot ignore the impact of those measures on the industry.

Mr. Gill: I remind the hon. Gentleman that, in an earlier debate, he agreed that the measures to which he has just referred, particularly the designated ports, will result in more dead, adult, saleable fish being dumped into the sea than before. We are tonight talking about conservation and we must come up with a better answer to those problems than more regulation, which is becoming an intolerable burden on an industry that is already over-regulated.

Mr. Morley: I do not recall saying exactly that. I shall deal with discards in a moment.
We have made progress with the multi-annual guidance programme. We have managed to match the capacity of most of the demersal fleet to the availability of fish stocks in line with our obligations under the MAGP. In areas where there is still overcapacity in relation to efforts in the pelagic and beam-trawl sectors, we have reached agreement with the industry about measures to reduce effort based on days at sea.
The difference between that measure and the scheme that was opposed by the previous Administration is that we gave the industry a choice in how it administered effort reduction. We wanted the industry to be involved in the management and implementation of effort reduction, which it has done in the pelagic and beam-trawl sectors. We made it clear that if the industry did not want to do that, the Ministry would have taken on the task. We preferred the industry to take on the measure, and we are glad that it is implementing it.
The hon. Member for Witney asked me for my views on marketing. I believe that there is a role for marketing and certification of the kind that the Marine Stewardship Council has proposed. That applies not only to fish, but to forestry products and even food products. Consumers are increasingly interested in such certification, and I view the MSC's actions with considerable interest and closely follow its actions. MAFF has a role in some trial areas such as black-water herring, where we have a particular interest in what the MSC is doing.
I have consistently stressed marketing and traceability to the industry, and said that sometimes it is necessary to concentrate not so much on quantity as on quality—fewer but better-quality fish can improve prices. Although the industry might land less fish, it would not necessarily lose out financially. In some cases, even when quotas are cut and fewer fish are landed, fishermen are compensated by the increased prices. Incidentally, we saw that happening last year and, indeed, running into 1999.
As for technical measures, we have supported the industry on things such as square-mesh panels, and we are looking at ways to manage the quota for the inshore fleet. We have underpinned the quota for sectors such as the mackerel handliners, which are low impact, in order to create a more sustainable fishery. We have banned such things as automatic grading machines, which waste fish at sea, and we have supported the V-notching of lobsters so that female lobsters in berry can be released and allowed to breed.
I have consistently made it clear that industrial fishing can have very undesirable consequences. In many cases, it is a waste of a very good resource; it can have an impact on commercial fish stocks by removing a food source; and, of course, it can affect marine mammals and sea birds, and, indeed, the whole ecology of the sea. That is why we have proposed seasonal closed areas running from the Orkney to the Humber, areas of the North sea in which industrial fishing will not take place. That will protect sea birds in particular, but has consequences for migrating salmon and sea trout. Spring-running salmon are under considerable threat. We intend to take this issue forward at the next Fisheries Council. We have also supported closed areas for bass stocks and the phasing out of drift nets because of their impact on not only marine mammals but a range of non-target species, including sharks.
I certainly do not agree that we are in danger of instituting over-conservation, but I can reassure the House about angling boats. MAFF has no proposals to limit the number of fish landed by angling boats. We are of course anxious to make sure that angling boats supposed to be for sport and recreation are used for sport and recreation, and are not landing fish for the commercial market. If we have evidence that that is not the case, we shall enforce sanctions rigorously. Fishermen and sea fish committees are anxious that we do that. However, we cannot ignore the impact of sports fishing. It is a large and important sector, and when we unfortunately have to close the channel cod fishery, as we did last year, we cannot exempt it. We are looking for measures to help the inshore fleet that will benefit the sports angling sector too.
I accept that fisheries science is not precise, but I must point out that, last year, the fishing industry agreed not to take the full recommended allocation of cod. It was a good year for cod, but the industry wanted to leave some cod to mature and thus allow stocks to increase for future


years. I do not think that that has been done before, and it is to be welcomed that the fishing industry itself is taking conservation and sustainability seriously and is working with us in the Ministry and with other groups to deal with it.
We have also put more species on quota because quotas are important to conserve stocks. Dogfish is the most recent species to have been agreed.
I want to make it clear, especially to the hon. Member for Ludlow (Mr. Gill), that a recent study of North sea cod fishery showed that 90 per cent. of discards were

under-sized fish, not marketable fish. Although it is certainly true that some marketable fish are caught, which no one wants to happen, the majority of discards are under-sized fish. The answer lies in technical measures, in matching the capacity to fish stocks and in long-term sustainability. The proper way to reduce discards is proper management, proper enforcement and—I fully agree with the hon. Member for Witney—putting sustainability at the heart of all our fisheries policies.

Question put and agreed to.

Adjourned accordingly at half-past Seven o'clock.